Govt seeks to limit budget deficit
Govt seeks to limit budget deficit
The government has announced that it will seek to maintain a budget deficit of not more than 5 percent of Gross Domestic Product (GDP) despite the country's revenue shortfall.
The control of the budget deficit comes as the government steps up its efforts to manage rising chronic debts by tightening budget expenditure.
Director General of the Ministry of Finance's Budget Department Dr Bounleua Sinxayvoravong told Vientiane Times yesterday that the country's financial liquidity has seen improvement recently which should not impact on the budget expenditure enormously.
“I think that it's critical for the government to keep the budget deficit at not more than 5 percent of GDP. You can see that in the first six months of this year, we could collect more revenue compared the same period the previous year,” he said.
“While income from the mining sector has declined, revenue collected from value-added taxes is tending to rise. We will work harder to collect revenue in the rest of the year.”
According to the government's draft report about socio-economic development and the budget plan, the government was able to seek funding from other sources to fill in the deficit incurred in the first six months of this year.
The draft report also stated that the government has set the target for revenue collection at 29.257 trillion kip for 2015-16, an increase of 15 percent compared to the previous year and representing about 25 percent of GDP. Of the total figure, 23.600 trillion kip will come from domestic revenue collection.
Meanwhile budget expenditure has been set at not more than 34.500 trillion kip for 2015-16, an increase of 11 percent compared to the previous fiscal year and representing about 29.8 percent of GDP. With these targets, the budget deficit should be kept at below 5 percent of the GDP.
The government approved these targets at a meeting held between cabinet members and provincial governors in Vientiane in April before the draft report being submitted to the upcoming session of the National Assembly (NA) in June or July.
The NA Standing Committee held its monthly meeting in Vientiane on June 2-3 aiming to discuss fundamental issues affecting the nation, including the government's reports in regards to socio-economic development, budget and financial plans.
The government's efforts to deal with budget deficit and the country's debts were also tabled, along with the policy to promote commercial production but no details about the meeting results have been revealed.
Laos has recorded consecutive budget deficits in recent years due to the revenue shortfall, resulting in delays to the payment of the salaries of state employees. The shortfall has also impacted on budget expenditure, notably in regards to development projects.
The budget shortage is also related to the fact that many companies (both small and large) tried to avoid paying taxes to the government via various means. Another factor was financial leakages, which if not addressed could bring greater damage to the nation.
