The Lesotho government's development objectives are based on a food-security policy approach, built around small-scale irrigated agriculture projects and improved rural water supplies. Donors supported the fourth five-year plan (1988–91) with pledges of $390 million. Lesotho receives development assistance from the United States, United Kingdom, Germany, South Africa, Canada, Taiwan, the European Union, the World Bank, and various United Nations agencies.
In 2001, Lesotho negotiated a three-year $35 million Poverty Reduction and Growth Facility (PRGF) Arrangement with the International Monetary Fund (IMF). Unemployment, poverty, and the HIV/AIDS pandemic are challenges facing further economic development. The sale of the state telecommunications company in 2001 stood as evidence of Lesotho's continuing privatization program. The government in 2003 was committed to public sector reform and market-friendly policies, as illustrated by its support for the Lesotho Public Sector Improvement and Reform Project.