Chapter four: Economic governance and management pursue efficient tax collection reforms. There is obviously limited room for broadening the tax base without substantial GDP growth. This is why it is important for the government to pursue policies aimed at stimulating higher domestic investment and growth which will enable the government to increase public revenue. [MoFDP, Ministry of Local Government and Chieftainship (MoLG), district administrators] • The government should curtail the annual budgetary underspending by increasing the implementing capacity of government departments. (Parliament, MoFDP, MoLG, district administrators) • The government’s trade policy should support efforts to diversify Lesotho’s exports and their destinations. This is one of the ways to reduce the impact of external shocks arising from international trade. (MTICM) Objective 2: Implement sound, transparent and predictable economic policies i. Summary of the CSAR 409. Policy making in Lesotho is significantly influenced by several regional integration arrangements to which the country is a signatory. As mentioned earlier, theses arrangements include SACU, the SADC and the CMA. In line with other smaller SACU members, economic policy making in Lesotho closely mirrors that of South Africa. Thus, fiscal and monetary policies in Lesotho are not independent. Guided by the 1993 constitution, Lesotho has adopted several legal and institutional frameworks to enable and guide economic policy making. These include the Lesotho Interim Poverty Reduction Strategy Paper (PRSP), Vision 2020, the public finance management framework and the Local Government Act of 1997. 410. The Lesotho PRSP was developed in 2000 by a technical working group under the oversight of the deputy prime minister, a committee of principal secretaries of various line ministries, and the governor of the CBL. The working group included representatives from government, the private sector, nongovernmental organisations (NGOs), the National University of Lesotho (NUL) and the donor community in Maseru. Similarly Vision 2020, a long-term development vision adopted in 2004, was prepared through a consultative process encompassing focus groups at village, community, district and central levels. The focus groups included political leaders, chiefs, members of parliament (MPs), district councils, youth groups, people with disabilities, civil servants and students. All these groups were represented on the steering committee that prepared the Vision 2020 document. 411. The public finance management framework emphasises credibility in the budget, comprehensiveness and transparency in policy development, policy-based budgeting, predictability and control in budget execution, accounting, recording and reporting, external scrutiny and auditing. In an attempt to improve the links between budget processes and the requirement of overall strategies, such as the PRS and the Millennium Development Goals (MDGs), the government of Lesotho introduced the MTEF in 2004. This was used for the first time in the preparation of the 2005/2006 Budget. 115