Laos plans to lower debt to 64.5% of GDP by 2023
The Lao government has vowed to reduce the total public and publicly guaranteed debt stock to 64.5 per cent of gross domestic product (GDP) by the end of 2023.
This is a major goal as outlined in the National Agenda to address the country’s economic and financial difficulties.
The agenda is being implemented after it was approved in August at an extraordinary session of the National Assembly’s ninth legislature.
Part of this goal is to reduce external public debt to 55.4 per cent of GDP, according to the National Assembly’s Resolution on the adoption of the national agenda.
Last year, total public and publicly guaranteed debt stock stood at $13.3 billion, accounting for 72 per cent of GDP, according to the Ministry of Finance’s public debt bulletin.
External public debt stood at $10.6 billion, representing 57.2 per cent of GDP. Meanwhile, domestic public debt stood at $912 million, making up 4.9 per cent of GDP.
To reduce the nation’s debt as targeted in the national agenda, the government will put in place a number of measures.
First, create clear budget expenditure including a plan to repay debts owed to private companies which undertook state investment projects. Define sources of revenue to repay debts and reduce external loans to repay debts.
Formulate a plan for state investment projects that reflects the reality of the national budget. Competitive bidding is essential for state investment projects while austerity will be encouraged. Reduce spending on administrative affairs.
Second, address financial leaks and boost revenue earned from mineral exports, land and land concessions, and online trade.
Third, invest in priority projects that guarantee high economic returns and create favourable conditions for private investment.
Fourth, focus on the management of foreign currencies, exchange rates, foreign currency income, and foreign currency transactions through the banking system.
Fifth, accelerate the reform of loss-making state enterprises by restructuring management and strengthening capacity-building of staff to enable these enterprises to make a profit in the future.
Sixth, inspect and review land concessions for agricultural production, animal husbandry and mining.
Seventh, seek ways to reduce electricity imports to reduce foreign currency expenditure. Concentrate on high-quality hydropower projects, solar power and wind, in parallel with the expansion of the national grid to ensure energy security.
Eighth, conduct pilot projects on the excavation of metals while ensuring reduced impacts on the environment and people’s livelihoods.
Ninth, push for greater commercial production to reduce imports and boost exports along economic corridors.
Tenth, promote small- and medium-sized enterprises (SME) and ensure that they have access to low-interest loans and markets, creating a stronger supply chain in Laos.
Eleventh, reduce unemployment among university graduates and migrant workers returning from Thailand by focusing on skill development to suit the needs of the job market.