This report examines progress andchallenges in reducing poverty in Lesotho. Lesotho'spoverty rate is lower today than it was 15 years ago.However, with a poverty rate of 49.7 percent in 2017,poverty remains widespread. Economic vulnerability is high,with more than 75 percent of the population either poor orvulnerable to poverty. This suggests that most of thepopulation lack economic opportunities and are deprived onmultiple fronts. Urban areas experienced greater povertyreduction due to improvements in education and increases inincomes from well-paying jobs, largely in the servicessector. In rural areas, poverty stagnated due to slow growthin agricultural incomes, a fall in remittances andvulnerability of the rural population to weather shocks.Despite the growing urban-rural poverty divide, inequalityfell as a result of expansion of social protection and anincrease in wage incomes among the poor. In spite of this,Lesotho remains one of the 20 percent most unequal countriesin the world. A combination of policies that improve humancapital, promote job creation and address high unemployment,increase agricultural productivity, together with those thatbuild resilience against economic and environmental shocks,would boost shared prosperity and accelerate povertyreduction in Lesotho.