Landmark Partnership Propels Laos Towards Greener Future

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Deputy Governor of the Bank of Laos, Vathana Dalaloy (L) and IFC Country Manager for, Laos, Vietnam and Cambodia, Thomas Jacobs, in Vientiane Capital on 12 December 2023. (Photo: Pasaxon)

The Central Bank of Laos (BOL) and the International Finance Corporation (IFC) inked an agreement on 12 December to boost their partnership in promoting green finance.

The signing ceremony, hosted in Vientiane Capital, featured the Deputy Governor of the Bank of Laos, Vathana Dalaloy, and the IFC Country Manager for Laos, Vietnam, and Cambodia, Thomas Jacobs, as signatories.

This strategic partnership is designed to strengthen collaboration in the promotion of green finance. It will involve active participation in essential reforms, including the development of guidelines and standards. The ultimate goal is to attract green capital, foster economic growth, create jobs, and contribute to the establishment of a sustainable environment.

Given Laos’ heavy reliance on climate-sensitive resources such as water, forestry, and agriculture, the country’s economy is profoundly affected by climate change.

In response, Laos has set ambitious targets, aiming for a 60 percent reduction in greenhouse gas emissions by 2030 and carbon neutrality by 2050. To achieve these goals, the country plans to invest nearly USD 4.8 billion in mitigating climate change impacts, as outlined in its National Determined Contribution (NDC).

Green finance, encompassing financial products, services, investments, and strategies, plays a pivotal role in supporting environmentally sustainable and socially responsible initiatives within Laos. This allocation of capital prioritizes projects and activities that yield positive environmental impacts.

Speaking at the ceremony, Vathana highlighted the financial sector’s key role in channeling investments into green projects, aligning them with national environmental objectives.

He further affirmed the Lao central bank’s dedication to guiding the financial sector toward green finance, acknowledging that the IFC’s support will significantly enhance efforts to establish a policy and regulatory environment conducive to the widespread availability of green financial products within the domestic market.

The collaboration between the Central Bank of Laos and the International Finance Corporation marks another step towards a sustainable future. By prioritizing green finance, the partnership aims to tackle climate challenges and propel Laos towards its environmental goals.