Laos is seeking more time to pay off its debts, as its external debt payments nearly doubled to USD 950 million last year, from USD 507 million in 2022, according to a government report.
To manage this, Laos deferred USD 670 million in payments in 2023, adding to the USD 1.22 billion already postponed since 2020, as illustrated by the official document released by the Lao Ministry of Finance on 28 June.
To address this, the Lao government is negotiating with creditors to defer existing debts and improve liquidity.
Laos has a total public debt of USD 13.8 billion, which is 108 percent of its GDP. About USD 10.5 billion of this is owed to China. The government plans to reduce the debt-to-GDP ratio by 2025, despite expecting high yearly debt payments of around USD 1.3 billion from 2024 to 2028.
Domestic issues, such as the depreciation of the Lao kip, make the situation worse, The World Bank reported The kip weakened by 31 percent against the US dollar last year, making it harder to service debt since 59 percent of the total debt is in US dollars. While deferring debt to China provided some relief from 2020 to 2023, remaining interest and payments still accounted for 5 percent of GDP in 2023, the World Bank said.
