Laos faces serious budget deficit

In Vientiane, Laos (Photo: Reuters)

Vientiane (VNA) - An elevated fiscal deficit will result in growing public debt, which will ramp up pressure on Laos' debt servicing capacity amid the COVID-19 crisis, the Vientiane Times reported on August 21.

The Lao Government has estimated that the budget deficit will rise from 6.69 trillion kip (700 million USD) , equal to 3.7 percent of the country’s gross domestic product (GDP), to 10.3 trillion kip (1.1 billion USD), or 5.7 percent of the GDP.

Chairman of the Lao National Assembly’s Planning, Finance and Audit Committee, Dr Leeber Leebouapao told the paper that the government is seeking ways to address the country’s debt following a revenue shortfall.

The government may attempt to issue bonds to mobilise more funds or borrow more money from various sources to repay debts and address the projected budget deficit, he said.

The World Bank (WB) also stated that public debt is expected to rise to around 65 percent to 68 percent of GDP in 2020, leaving Laos at high risk of debt distress.

In June, Prime Minister Thongloun Sisoulith told the National Assembly that the government will issue bonds for the rest of this year to repay debts.

Economists have recommended the government to assist the private sector, notably small and medium-sized enterprises to lower their production costs in order to boost productivity for exports./.