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Tuesday, June 25, 2024

Laos Sees Foreign Currency Outflow of Over USD 303 Million this Year

This Week

The Lao government has reported a foreign currency outflow of over USD 303 million in the first nine months of this year.

According to a report by Lao Youth Radio, Laos recorded a foreign currency outflow of approximately USD 34 million per month this year.

Governor of the Bank of Laos, Mr. Sonexay Sitphaxay, told the National Assembly on Monday that implementing the government’s plan for currency management in the first nine months of this year has met with internal and external challenges.

“The value of the kip has depreciated against major foreign currencies, while the price of gold, fuel, food, and other items has risen,” said Mr. Sonexay.

“The demand for payments with foreign currency remains high, but the country’s revenue has dropped sharply as a result of the Covid-19 pandemic,” he added.

Although international trade will see a surplus in the first nine months of the year, the country still has a service deficit, resulting in foreign currency outflows of more than USD 303 million, or nearly USD 34 million per month.

Fake Lao Kip Circulating

Lao Kip in Downard Spiral

The Bank of Laos is to take steps to try to control the exchange rate by managing the difference of exchange rates between that of banks and the informal market rate.

To achieve this, authorities have ordered currency exchange businesses to transition into representatives of commercial banks across the country.

“A total of 419 out of 550 exchange businesses have already signed up with banks,” Mr. Sonexay told NA members.

The move is believed will make foreign currency management more efficient and in turn, assist in easing financial difficulties currently faced by the nation.

Mr. Sonexay also said that the Bank of Laos was able to raise LAK 400 billion for the promotion of SMEs through the Ministry of Finance and the issuance of government bonds worth LAK 1,073 billion and USD 33.3 million at the Lao Securities Exchange, according to Vientiane Times.

Residents have urged the government to address the rising cost of living, as the fluctuating exchange rate and depreciation of the Lao kip have impacted those with low incomes.

Vientiane Capital has begun to witness fuel shortages with unfavorable exchange rates and regulated fuel prices causing havoc for fuel importers.

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