Laos’ public debt remains manageable: Minister

Hanoi (VNA) – Lao Finance Minister Bounchom Oubonpaseuth has assured National Assembly (NA) members that public debt is still manageable, despite the total amount remaining considerable, Vientiane Times reported.

The Lao lawmakers have expressed concern over rising public debt against a backdrop of steep depreciation of the local currency, rising inflation, and economic vulnerabilities caused by the war in Ukraine.

When it comes to the public debt, the government can assure that management is at a high degree of safety, Bounchom told parliament last week.

“We will not allow our country to slide into default,” Vientiane Times quoted the minister as saying.

Public debt levels have increased considerably since 2019, rising to 88 percent of GDP in 2021, with the energy sector accounting for over 30 percent of the debt stock, according to the World Bank.

During his speech at the NA session, Finance Minister Bounchom said that the government has sufficient funds to repay debts until August this year.

The government has sold bonds to help pay off domestic obligations and is negotiating with foreign creditors to extend repayment terms for debts due beyond August.

While a budget was approved by the NA to repay domestic and foreign debts amounting to 7.15 trillion LAK (476.96 million USD) and 1.598 billion USD, respectively, this year.

By May, only 1.62 trillion USD in domestic debt had been paid, accounting for just 24.53 percent of the target.

At the same time, only 137.9 million USD of planned foreign debt repayments had been made, accounting for only 8.62 percent of the target.

Minister Bounchom explained these small amounts by saying that the majority of debts were not due until the third and fourth quarters of this year.

He said that the sale of government bonds had netted the government over 9.57 trillion USD, or 95.78 percent of the target./.