The country's political, economic, and social woes are enormous. The most immediate concern faced by Mosisili on taking office was the crisis created by his party's victory in the May 1998 elections. Allegations of vote rigging led to mass demonstrations. In response, Mosisili agreed to the appointment of a regional committee to investigate these charges. The South African deputy president, Thabo Mbeki, led an investigative team which reported "serious concerns" about the voting, but did not recommend that the election be invalidated. Demonstrators and opposition party leaders indicated that they did not accept the Mbeki mediation effort. Instead, they called for the immediate removal of Mosisili and the formation of a new unity government.
As protests grew increasingly violent and the Mosisili government appeared to be losing control of its military, South African troops were asked to restore order. With little public support, the intervention proved more difficult than expected. The troops met fierce resistance from Lesotho's mutinous army, resulting in 60 deaths and over US $150 million in property damage.
Once order was restored, a multiparty Interim Political Authority (IPA) was established to prepare for the next general election, in May 2002. Besides setting electoral rules and regulations through the development of an Independent Electoral Commission, voter registration and education have been priorities of the IPA. Mosisili has reportedly been extremely critical of the IPA since its inception.
In 2003 the Basotho National Party (BNP) proposed a coalition government, which it referred to as a "government of national unity." As part of the proposed coalition, the BNP demanded that their members be given the cabinet positions of minister of law and constitutional affairs and minister of natural resources. Mosisili rejected this proposal, stating that while nine opposition parties were represented in the current mixed member proportional national assembly, none of those parties had enough members to be designated an official opposition party.