Laos Sees Rising Public Debt Following Covid-19 Economic Effects

Rising public debt for Laos as revenue collection drops and loans increase

Public debt is on the rise for Laos after a drop in revenue collection and an increase in loans amid the Covid-19 pandemic.

According to a report in Xinhua, one government official has said that Laos’ public debt could rise to as much as 65 to 68 percent of GDP in 2020 following a steep decline in national revenue collection alongside an increase in loans due to the Covid-19 pandemic.

In 2020, Laos’ revenue collection will fall by some LAK 6.322 billion, (USD 696 million), Minister of Finance Deputy Prime Minister Somdy Douangdy said at the recent ninth ordinary session of the National Assembly’s eighth legislature.

According to an assessment by an agency of the Ministry of Industry and Commerce, the value of exports during the first six months of 2020 was at a reduced level of around USD 2.6 billion, down by 5.1% compared to the same period in 2019.

The processing and construction industries, two sectors vitally important to Laos, showed a downward trend, including drops in cement, gold, and copper production, according to the Vientiane Times.

Investment is also declining, as, in the first five months of 2020, the value of approved investments through concession programs was only USD 151 million, compared to USD 2,383 billion for the same period in 2019.

Meanwhile, the tourism sector has been heavily affected by the Covid-19 pandemic, with only 887,447 in the first six months of the year.