Govt urged to tighten fiscal expenditure
Govt urged to tighten fiscal expenditure
A senior economist has vowed to ensure strong support for the government policy to tighten expenditure as part of measures to maintain macro-economic stability.
Lao National Economic Research Institution Director General Dr Leeber Leebouapao said earlier this week that the government was facing rising domestic debts and it needs to save money so as it can afford to pay off the debt.
“If the government is unable to pay off the debt, it will have a negative impact on macro-economic stability,” he told Vientiane Times on Monday.
One of the main causes, making domestic spending rise rapidly is that many state agencies allowed private sector investors to develop infrastructure projects first while they will use the state budget which they receive each year to pay off the debt.
The investment projects are typically carried out without a bidding process, which is driving costs higher than normal.
The government is developing a national policy on saving as part of measures to safeguard the national economy. The policy, which is now under discussion among policymakers, is expected to be finalised and approved in the near future.
State officials and agencies will be urged to spend the state budget economically. For example, they should turn off their office air conditioners while officials go out for lunch so they reduce the cost of electricity, according to officials.
Many people said that state officials should play a greater role in leading the public in the push for greater thrift. For example they should not use state vehicles for private purposes.
Dr Leeber, who has been monitoring the Lao economic development situation, said that one of the major challenges is that the government was unable to achieve its revenue collection target over the first quarter of this year, causing difficulties when it comes to securing funds for debt payment, expenditure plans and investment projects.
Many people said that it was necessary for the government to tighten its belt and save money to pay off the debts to businesspeople in particular ones who borrow money from commercial banks to fund the state investment projects.
People said that if the government cannot pay off the debt on time, it will cause difficulty for businesspeople to obtain funds to run and expand their businesses. The slowdown in business expansion will cause an increase in the unemployment rate.
Over the past months, the government has tried its best to tighten its belt. The government has cut the living allowance of state officials, which will save about 2,000 billion kip this fiscal year, which can go towards paying off the debt.
Many economists said that despite the fact the government has a sound policy to safeguard macro-economic policy one of the major challenges is that once the government suspends new investment projects it will cause a slowdown of the economy.
The World Bank has already forecast that the Lao economy will moderate to 7.2 percent this year after experiencing at least eight percent growth over the past two years. The Asian Development Bank also forecast that the Lao economy will not see more than 7.5 percent growth this year.
vientiane times
