With few natural resources, Lesotho survives mainly on water and electricity sales to its only neighbor. In recent years, the completion of the first phase of the Lesotho Highlands Water Project has brought economic growth.
Since independence from UK, there has been a continuing power struggle between the opposing political parties, the military, and the monarchy. A new constitution in 1995 brought some sense of national reconciliation. However the 1998 election results again triggered civil unrest. Elections were held in 2002 under a new system. King Letsie III remains Head of State, while Bethuel Pakalitha Mosisili is now Prime Minister.
Unemployment is high, and the income distribution highly skewed. Over 300,000 Lesothoans suffer from HIV/Aids, and thousands have already perished.