Laos Won’t Default on its Loans, Assures PM

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Lao PM Phankham Viphavanh at the National Assembly

Prime Minister Phankham Viphavanh informed the ongoing session of the National Assembly that the government would try its best to repay public debt so that it does not go into default.

With ever-rising inflation rates and a projection by the World Bank that Laos’ public debt would exceed its entire GDP this year, the PM announced that the government is putting measures in place to clear this massive amount. Minister of Finance Bounchom Ubonpaseuth also reiterated this assurance to members of parliament.

According to him, Laos has several new sources of income from mineral exports and the mining of digital currencies whose revenue has now crossed USD 120 million and USD 420 billion respectively.

Laos is currently on the way to repaying LAK 10,083 billion (USD 580,467,707) worth of domestic debt this year, more than half of which has already been paid. The country’s foreign debt was USD 1,241 million out of which USD 520 million has been cleared.

“I wish to assure you that we have sufficient capital to repay our debts by the end of the year,” said Mr Bounchom.

The government also expects the country’s budget deficit to reduce from LAK 3,098 billion (1.61 percent of GDP) to LAK 979 (0.51 percent of GDP) while revenue is likely to go over the target amount for the year by 6.27 percent, amounting to more than LAK 1,981 billion (USD 1,14,065).

The finance minister said that the government has discussed postponing debt payments with some of its creditors, so that it allows the country to ease on its borrowing plans. Laos had expected to get loans worth LAK 16,900 billion (USD 9,73,095) from foreign creditors but until now it has only received loans worth LAK 8,891 billion (USD 5,11,940), that includes LAK 6,239 billion (USD 3,59,239) worth of foreign investment.

Meanwhile, the Minister of Planning and Investment Khamjane Vongphosy said at the National Assembly that Laos received a trade surplus of USD 911 million until September, and it is expecting the total figure to reach USD 1,199 million by the end of 2022. However, only a small percentage of the foreign currency received from exports and internationally-funded development projects in Laos was able to enter the banking system.

In its attempt to pursue and achieve macro targets, Laos would try to achieve a GDP growth of 4.4 percent in 2022, which would be slightly higher than the 3.5 percent recorded last year. The government also set a growth target of at least 4.5 percent for next year at LAK 234,160 billion (USD 1,34,82,839).