Lao Economy

Debt To Be Reduced In Next Five Years, PM Says

Source: Vientiane Times

Public debt that has been accumulating for years to the present high level will be considerably lowered in five years’ time, Prime Minister Thongloun Sisoulith has said.

“Debt has been heavily accumulated over the past years. It will take us at least five years to allocate [funds for repayment] and overcome the debt,” he told a recent meeting in Vientiane, which gave instructions on the implementation of the national socio-economic development plan for 2017.

As of the 2015-16 fiscal year, an initial summary report showed that 986 state-invested projects had accrued debt, after being approved by the National Assembly.

The projects, whose construction is complete, cost 5,662 billion kip. Of this amount, the government has paid just over 2,550 billion kip of the debt, representing just 45 percent of the total, according to a report on the 2015-16 socio-economic development plan. In that year alone, more than 460 billion kip was allocated to repay debts.

The above-mentioned total debt excludes some of the debts accumulated and caused by expenditure on natural disaster recovery, according to the report.

Prime Minister Thongloun said more money has been sourced to repay debts since the government took tough action to properly collect revenue and close loopholes that allow revenue leaks.

The prime minister pledged to employ measures to ensure that disbursement for the remaining debts would be made in a just and transparent manner. He said many investors who paid for a project to be carried out on the understanding that the government would reimburse them later, are still waiting to be repaid.

Officials have said there were cases where the repayment of debt was not transparent. Some officials in charge took bribes in exchange for favours given to investors when it came to deciding who should be repaid first given the limited budget available.

The prime minister stressed the need to prevent state departments from creating new debt by properly managing state-funded projects.

In addition to the debt accumulated by approved projects, considerable debt was accumulated by unapproved projects.

Previous reports emerged suggesting that many state departments approached private investors to carry out state-funded projects without approval from the National Assembly. The investors put up the initial capital required and state departments were requested to repay them at a later date.

In light of this issue, the government has instructed all state departments to stop carrying out unapproved projects and warned that those who infringe the ruling will be penalised.

Prime Minister Thongloun told the recent meeting that the debt accumulated by unapproved projects is now manageable.