Lao govt allowed to issue bonds in Thailand
Lao govt allowed to issue bonds in Thailand
Thailand’s Finance Ministry has given its Lao counterpart the green light to issue baht-denominated bonds worth Bt7 billion to refinance its debt, Thai local media reported recently.
The period of fund raising is from May 1, 2017 to January 31, 2018, Thailand’s the Nation reported, citing the director-general of the Thai Public Debt Management Office, SuwitRojanavanich.
Laos is the first foreign entity to be allowed to raise funds via baht-denominated bonds this year.
The Thai Finance Ministry recently changed its policy on fund raising here by allowing only a few foreign governments and investors to issue baht bonds, as it wants to preserve liquidity for reinvesting in the domestic market, according to The Nation.
The Lao government gets most favourable treatment as Thailand purchases electricity from Laos, it added.
Prime Minister ThonglounSisoulith told the ongoing Ordinary Session of the National Assembly (NA) that the government will attempt to manage bonds better, to create more confidence among buyers.
Issuing bonds has been a source of finance for the Lao government as it attempts to redress its budget deficit.
This year, the government has set the budget deficit at no more than 8,461 billion kip and is targeting revenue collection of 23,941 billion kip, while expenditure has been set at no more than 32,402 billion kip, according to the 2017 Socio-economic Development Plan approved by the National Assembly.
The long-standing budget deficit has contributed to the accumulation of a high level of public debt.
Minister of Planning and Investment DrSouphanhKeomixay told the ongoing Ordinary Session of the NA that the amount owed to private companies who carried out State investment projects was as high as 13,118 billion kip.
Last year, the government allocated 963 billion kip to pay the debts incurred by State investment projects.
In addition, during the fourth quarter of last year the government asked the NA to approve an extra 700 billion kip for the payment of debts.
The NA’s Standing Committee approved 400 billion kip for the payment of debts owed to State investment projects and 300 billion kip to pay for the bonds issued to finance these projects.
These funds have been paid out to the companies concerned since late last year, but the payments are not complete.
MrThongloun told the National Assembly that the government was trying to pay its debts to private companies so they could continue with their business. He is committed to further studying and allocating budget to pay off debts.
MrThongloun said previously that it would take at least five years for Laos to ease its debt burden.
“Much debt has been accumulated in recent years. It will take us at least five years to allocate money [for repayment] and overcome the debt,” he told a meeting in Vientiane when giving instructions for the implementation of the 2017 socio-economic development plan.
