How the Lesotho Budget Process Works: Step-by-Step Guide from Preparation to Approval and Spending

How the Lesotho Budget Process Works: Step-by-Step Guide from Preparation to Approval and Spending

Every year, Basotho watch the Minister of Finance stand in Parliament and present what is commonly called “the Budget.” It is often treated as the final step. Headlines are written. Allocations are debated. Celebrations and criticisms follow.

But in reality, the Budget speech is only the middle of a much longer legal and administrative process.

The truth is this. Government cannot spend a single cent legally simply because the Minister announced it. There is a constitutional chain that must be completed first. Understanding this process is critical for citizens, businesses, contractors, and civil servants who depend on government spending.

This explainer walks through how Lesotho’s budget moves from preparation to actual release of money.

Step 1: Budget Preparation Begins Inside Government (August to January)

The process starts months before the public ever hears about it.

The Ministry of Finance issues what is called a Budget Call Circular to all government ministries, departments, and agencies. This circular instructs them to prepare their spending plans for the next financial year.

Each ministry submits:

• Operational expenses (salaries, fuel, utilities)

• Capital projects (roads, hospitals, schools)

• New policy proposals

At this stage, ministries often request far more money than government can afford.

The Ministry of Finance then reviews these requests against:

• Expected tax revenue

• SACU receipts

• Grants and loans

• Economic forecasts

This is where difficult decisions begin. Many proposed projects are reduced, delayed, or rejected entirely.

This internal stage is where the real budget is shaped.

Step 2: Cabinet Approval – Political Authorisation

Once the Ministry of Finance finalises the draft budget, it is presented to Cabinet.

Cabinet, chaired by the Prime Minister, reviews and approves the budget as government policy.

This is a critical step because it converts the budget from a technical proposal into an official government position.

After Cabinet approval, the Minister of Finance is authorised to present it to Parliament.

Step 3: Budget Speech in Parliament – Public Presentation (February)

This is the stage most citizens are familiar with.

The Minister of Finance presents the Budget Speech in the National Assembly.

The speech explains:

• Total government spending

• Tax measures

• Ministry allocations

• Economic outlook

However, this speech does not give government legal authority to spend money.

It is simply a proposal to Parliament.

Spending authority comes later.

Step 4: Parliamentary Scrutiny and Debate

After the speech, Parliament begins detailed scrutiny.

This happens through:

Portfolio Committees

Each ministry’s budget is examined by relevant parliamentary committees.

Committees can question:

• Why allocations increased or decreased

• Whether projects are realistic

• Whether funds were properly used previously

Parliamentary Debate

Members of Parliament debate the budget in the National Assembly.

They can:

• Support it

• Criticise it

• Recommend changes

However, in practice, governments with majority support usually pass their budgets.

Step 5: Passing the Appropriation Act – Legal Authority to Spend

This is the most important legal step.

Parliament passes a law called the Appropriation Act.

This Act:

• Legally authorises government to withdraw money

• Specifies exactly how much each ministry can spend

Without this Act, government spending would be illegal.

This law operationalises the budget.

Step 6: Royal Assent – Budget Becomes Law

After Parliament passes the Appropriation Bill, it is sent to the King for Royal Assent.

Once signed, it becomes official law.

Only after this step does the budget fully exist legally.

Step 7: Treasury Releases Funds – The Most Misunderstood Step

This is where reality often diverges from public expectations.

Even after the budget becomes law, ministries do not automatically receive all their money immediately.

Instead, funds are released gradually by the Treasury.

This happens through a system called:

Warrants and Cash Releases

Treasury releases money based on:

• Cash availability

• Revenue collections

• Government priorities

If government revenue is lower than expected, Treasury may delay releases.

This is why some projects announced in the Budget never happen.

They were approved legally but never funded in practice.

This distinction is crucial.

Budget approval does not guarantee spending.

Cash availability determines actual spending.

Step 8: Ministries Request Funds and Spend

Once Treasury releases funds, ministries can:

• Pay salaries

• Pay contractors

• Buy equipment

• Implement projects

Payments are made through the government financial management system.

Step 9: Oversight and Auditing

After money is spent, several institutions monitor how it was used.

These include:

• Auditor General

• Public Accounts Committee

• Ministry of Finance

Their role is to ensure funds were used legally and properly.

This is how corruption and misuse can be identified.

Step 10: The Budget Execution Reality – Why Some Projects Never Happen

This is perhaps the most important reality.

Many Basotho assume that when a project appears in the Budget, it will definitely happen.

This is not always true.

Projects can fail due to:

• Lack of cash

• Delays in procurement

• Weak implementation

• Political changes

This is called budget execution risk.

It is a major challenge in many developing economies.

Key Terms Every Mosotho Should Understand

Budget Speech

A policy announcement, not spending authority.

Appropriation Act

The law allowing government to spend.

Treasury Release

Actual release of money.

Budget Allocation

Planned spending amount.

Budget Execution

Actual spending.

These are not the same thing.

Why This Process Matters for Businesses and Citizens

Understanding this process helps explain why:

Contractors are sometimes paid late.

Projects are announced but delayed.

Government spending slows during financial stress.

The key bottleneck is often not Parliament approval.

It is cash availability.

The Bottom Line: The Budget Speech Is Not the End. It Is the Beginning.

The Budget becomes real only when money is released by Treasury.

The process can be summarised simply:

Preparation → Cabinet → Parliament → Law → Treasury Release → Spending → Audit

Each step matters.

Each step determines whether promises become reality.

For Basotho, the true test of the Budget is not what is announced in February.