Government to focus on paying salaries and debts
Government to focus on paying salaries and debts
The government will prioritise its spending on paying the salaries of state employees as well as public debts in a move to improve the livelihoods of government officials and reduce budget tensions amid the country's chronic debts.
The national budget expenditure for the 2015-16 fiscal year is set for 35,000 billion kip, of which around 9,800 billion kip of the total figure will be spent on paying the salaries and allowances of state officials while another 6,209 billion kip will be allocated towards paying debts.
Only 3,800 billion kip will be allocated for State investment projects and the rest will be spent on administrative affairs, national reserves and other activities, according to the government's recent report.
Nevertheless the budget deficit will remain a greater challenge for the government as national revenue is set to reach only 29,213 billion kip. This means the government has to seek more funding from other sources including asking for loans from other countries to fill in the budget deficit.
A senior economist from the National Economic Research Institute Dr Leeber Leebouapao told Vientiane Times yesterday that in essence, loans will be spent on productive ventures that will boost economic growth and generate revenue for the government later on down the track.
In the case of Laos, the loans and money sourced from issuing bonds shall be spent on addressing the budget deficit, including paying debts, as well as paying the salaries of state officials.
“I think that the government wishes to minimise the problems in regards to the payment of officials' salaries as well as the looming debts next fiscal year. It plans to allocate more funding for state investment projects later on,” Dr Leeber said.
He accepted that borrowing money to pay debts would only address the problem in the short term but said it was still better than allowing the country's debts to continue to rise.
The revenue shortfall in Laos has occurred for several years. One of the main factors behind the shortfall was that many companies (both small and large) have 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 while income from the mining sector has declined as a result of the falling prices of commodities on the world market.
The revenue shortfall has also resulted in the slow payment of officials' salaries and affected development projects in Laos over the past years.
In the 2014-15 fiscal year, the country's budget deficit is expected to reach 5,184 billion kip or 5.07 percent of Gross Domestic Product (GDP).
Minister of Finance Dr Lien Thikeo told the National Assembly's intersession last month that the government has set a plan to borrow 2,314 billion kip this fiscal year for the implementation of development projects.
So far the government has been able to borrow 1,619 billion kip, equal to 70 percent of the yearly plan.
“We are also mobilising funding in the form of issuing bonds and loans, which will be worth 2,870 billion kip. So far we have been able to mobilise 1,553 billion kip, which is equal to 54 percent of the yearly plan,” Dr Lien said.
