Govt shifts focus to economic stability: economist
Govt shifts focus to economic stability: economist
A senior economist has welcomed a government move to concentrate on maintaining economic stability instead of robust growth.
“I agree with the government's policy to turn its focus to economic stability rather than growth,” the Lao National Economic Research Institute Director General, Dr Leeber Leebouapao told Vientiane Times on Wednesday. “It is not a good idea that we keep going for strong economic growth without stability.”
The government announced last week that it had lowered the economic growth forecast from 8 percent to 7.5 percent this fiscal year. The government also vowed to maintain an economic growth rate of 7.5 p ercent over the next few years.
The latest decision is seen as an attempt by the government to prioritise macro economic stability instead of robust growth after learning that the strong economic growth would force the government to borrow money and create huge debt.
Government debt has rapidly increased over recent years due to launching a policy that allowed the private sector to invest in state infrastructure first and then the government repaid the debt later.
The unexpected rise in its debt forced the government to suspend the investment policy as part of efforts to prevent the country from facing economic crisis. The government has also suspended salary increases for civil servants as part of efforts to save money for debt repayment.
According to a report from the International Monetary Fund (IMF), external debts of Laos have risen above US$3 billion. There is no information available to the media on domestic debts with the Ministry of Planning and Investment currently collecting data on this.
However, Prime Minister Thongsing Thammavong said the amount of debt had increased to an alarming level, forcing the government to stop the creation of new debts to prevent financial crisis.
Dr Leeber said the government should shift its focus to improving the business climate so it can attract dome stic and foreign investment, adding that promotion of small and medium enterprises (SME) should be one of the priorities the government should focus on.
He said at present most of the investment is based on the exploitation of natural resources including mining, which would be exhausted o ne day.
He also said that international financial organisations in Laos had urged the government to diversify its econo mic base to secure sustainable economic growth over upcoming decades.
Dr Leeber noted that man y countries have achieved remarkable economic development success by paying greater attention to developing SME. He said the growth of SM E not only reduces economic risk but also creates many job opportunities.
vientiane times
