Debt in Lesotho

Debt in Lesotho arises when a person, company or public body receives money, goods or services and must repay money or perform another obligation later. The debtor owes the obligation and the creditor can claim repayment under the agreement or applicable law. Debt may be secured by collateral or unsecured. Public debt finances the state and differs from private debt owed by households or businesses. The Ministry of Finance's Department of Debt and Aid Management handles government loan agreements, debt service, deficit financing, on-lending and debt analysis. Lesotho's January 2025 Budget listed total government debt at M23.1 billion: M19.3 billion, or 83%, was external debt and M3.8 billion, or 17%, was domestic debt. IMF figures for FY2024/25 placed gross public debt at about 56.8% of GDP, while an IMF mission statement reported 56.6%. The IMF assessed external and overall debt-distress risk as moderate and described the country as having limited room to absorb shocks. Domestic arrears, contingent liabilities and risks from state-owned enterprises and government guarantees can increase pressure beyond the recorded debt amount. The government has announced a fiscal anchor of 60% of GDP, but Lesotho had no permanent numerical fiscal rules in law according to the 2026 IMF Public Investment Management Assessment. The IMF recommended a medium-term target of 50% of GDP. Public debt transparency reports have been published quarterly since FY2022/23, typically with a delay of three to six months. A public borrowing process generally moves from a borrowing plan to a Ministry financing agreement and then to debt service or arrears clearance. Concessional borrowing is prioritised. Treasury bonds and other public borrowing are state-financing instruments, not private debt-relief schemes. Private credit is available through commercial banks, licensed microfinance institutions, including credit-only and deposit-taking MFIs, large financial cooperatives and SACCOs, money lenders, financial-lease providers and other regulated financial service providers. Non-formal options include village savings and loan associations, known as VSLAs, rotating savings and credit groups, and community savings or credit groups. Private loans also occur informally. A regulated provider must hold the relevant licence and falls under Central Bank of Lesotho supervision. Providers generally assess identity, repayment ability and credit history and may request collateral or an accepted substitute. LERIMA is an electronic registry for movable collateral, including crops, livestock, farm products and goods, hosted and administered by the Central Bank of Lesotho. No uniform minimum loan amount, interest rate or affordability threshold was verified across all providers. Before signing a regulated credit agreement, the provider should give clear, fair and plain information, a copy of the contractual disclosure and a Key Fact Statement, or KFS. The KFS sets out the principal, total cost of credit, total amount payable, duration, payment frequency, instalment, effective interest rate, consequences of late or missed payments, internal complaint process and the possibility of appeal to the Central Bank of Lesotho. Total cost can include arrangement, documentation and collateral-appraisal charges, credit-bureau fees, credit-life insurance, maintenance charges and required insurance or products. The rules prohibit undisclosed fees or interest, unilateral changes, discrimination and the use of an ATM card, passport or identity document as collateral. A provider must not force an unsuitable or unaffordable product or a higher amount than the borrower needs. A borrower has a five-working-day cooling-off period and may make an advance payment at any time. Borrowers should check the contract and KFS, keep the agreed due dates, request periodic statements and respond quickly when repayment becomes difficult. A provider must give at least 30 days' notice before changing contractual terms. Where possible, a borrower should continue undisputed payments while pursuing a complaint. No verified general legal entitlement to a standard restructuring or repayment plan was found, so negotiating revised terms with the creditor remains a practical option and its legal effect depends on the written agreement. Missed payments can lead to adverse credit information. A supplier must notify the borrower before reporting adverse information. Credit data should be accurate, complete and regularly updated, and a resolved dispute should not be submitted again as adverse information. The borrower normally complains to the provider first. If the response is unsatisfactory or the provider does not respond within 30 days, the Financial Consumer Protection Division of the Central Bank of Lesotho can be approached. A complaint should include a signed submission, the provider's reference or response, the contract and relevant statements. The published contact addresses are registry@centralbank.org.ls and complaints@centralbank.org.ls. The Central Bank's 2024 Annual Report recorded 258 consumer complaints, with 65% resolved or closed; the figures covered several financial sectors and were not limited to debt complaints. A creditor seeking enforcement must give written default notice under the Financial Consumer Protection Act. The notice must state the overdue amount and provide information about the borrower's right to remedy the default. No universal cure period was verified. Enforcement of movable security depends on the agreement and the Security Interest in Movable Property Act. A creditor may also seek court execution after obtaining a judgment. The rights of secured and unsecured creditors differ, and enforcement costs and timing depend on the contract and court process. For an individual, sequestration is a court process under the Insolvency Proclamation 1957. The current filing fee, qualifying threshold, duration and timetable for rehabilitation or discharge were not verified. Lesotho has no located nationwide statutory consumer insolvency counselling or settlement-plan system. For a company that cannot pay its debts, the Companies Act 2011 provides for court liquidation or judicial management. The Registrar, Court, Master and liquidator have different responsibilities. After a liquidation notice is published, creditors generally receive 14 working days to give notice of a claim. The liquidator generally publishes a notice, list and inventory within 10 working days and submits a statement of affairs or proposals within 20 working days. A secured creditor may realise the collateral, prove a secured claim or surrender the security and claim as unsecured, subject to the applicable process and documentation. Legal Aid Lesotho can assist indigent people with civil and contractual claims. Its main access point is in Maseru, with district attendance scheduled separately. Current insolvency fees, exact deadlines and a nationwide debt-advice service were not verified. Household debt burdens have been flagged for households affected by mining-sector job losses, while financial-sector reporting also notes asset-quality and credit-concentration risks. Lesotho's current national household-debt stock, arrears prevalence and exact 2026/27 public-debt figures were not verified.