Government officials are planning to settle over 400 billion kip on balances owed to companies, for completing State investment projects by the end of the second quarter.
Officials are planning to clear their debt for development projects that were pre-approved by the National Assembly (NA), to enable private companies to maintain their financial stability so they can continue contributing to the growth of the Lao economy.
According to the government’s report, completed construction projects and debts belonging to completed projects from 2012 and earlier will be placed on the first priority list for payment. Meanwhile, projects completed between 2013 and 2016 will be placed on a second tiered priority list.
Debts owed to companies that performed flood relief and recovery projects from the Nock Ten storm in 2011 and other storms will also be allocated for payment.
A senior economist from the National Economic Research Institute, Dr Leeber Leebouapao, stressed that paying off balances owed to companies that completed construction of NA approved projects was critical. He stated, “The government’s delays to pay out debts not only affects the financial liquidity of companies, but also affects commercial banks’ business.”
Dr Leeber also emphasized the importance of inspection standards for State investment projects, and those who met met the required standards should be given priority for payment.
According to the Ministry of Finance, as of April, 2017, 245 billion kip out of the 400 billion kip state budget had been compensated to 1,451 State investment projects, representing 61 percent of the total budget.
Projects executed by 16 ministries/ministry equivalent organizations and three provinces have now received money owed. The Ministry of Finance expects to disburse the remaining 155 billion kip to seven ministries/ministry equivalent organizations and 14 provinces by the end of June.
Minister of Planning and Investment, Dr Souphanh Keomixay, recently revealed that the debts owed to private companies who performed State investment projects was as high as 13,118 billion kip.
Last year, the government allocated 963 billion kip to clear debts incurred by State investment projects and requested the NA to approve an additional 700 billion kip during the fourth quarter.
Although the money allocated will not meet the financial needs of all entrepreneurs who invested in State investment projects, the government is committed to making debt payments in a transparent manner and in line with financial principles.