The government of Laos has said it expects economic growth of 3.3 percent this year despite the effects of the Covid-19 pandemic.
Prime Minister Thongloun Sisoulith confirmed the prediction when addressing the opening ceremony of the 10th session of the 8th legislature of the National Assembly yesterday.
During his speech, he highlighted the economic difficulties faced by Laos, including a rising debt burden exacerbated by the Covid-19 pandemic and recent flooding.
“We have been suffering from economic difficulties for several years. In addition, weather extremes and the Covid-19 pandemic are severely affecting socio-economic development,” he said.
He told the assembly that some of the country’s goals would not be achieved, specifically revenue collection and efforts to control inflation.
The government has drawn up short, medium, and long-term strategies to tackle its liabilities and obligations by seeking to reduce the fiscal deficit each year as the pandemic places a greater strain on Laos’ debt serviceability.
According to the Prime Minister, the government will no longer accept loans from foreign countries to try to address the fiscal deficit. Loans will only be taken out to repay the principal on existing loans when the time arrives for debts to be serviced.
“We are still able to repay debts owed to foreign countries at the moment,” Prime Minister Thongloun said.
The government is preparing to pass responsibility for its debts to private enterprises over to commercial banks, as this will allow private enterprises to retain their financial liquidity and continue business operations.
According to a report by Xinhua, the agriculture sector in Laos is expected to grow by 2.3 percent this year, representing 16.6 percent of its GDP. Industry is forecast to grow by 9.8 percent, accounting for 33 percent of GDP, but growth in the service sector is expected to contract by 1.6 percent, representing 39.5 percent of GDP.
The value of exports was USD 4.27 billion over the past nine months, equal to 70.8 percent of the revised plan for 2020 approved by the National Assembly.
Although the impact of the Covid-19 pandemic on the economy might continue until next year, the government is optimistic that the economy would recover to some extent due to the uninterrupted construction of large-scale development projects.
These projects include the Laos-China railway, Vientiane to Vangvieng expressway, building of industrial parks and dry ports, and hydropower and mining projects, all of which will help drive economic growth.