Fiscal Reforms Needed to Help Maintain Laos’ Economic Stability: WB Report

13/12/202313/12/2023 Karlo 1034 Views

The Lao government needs to carry out fiscal reforms to maintain economic stability and address fiscal challenges, according to a World Bank report.

The fiscal reforms could provide some immediate relief and help build a more equitable and sustainable system as Laos tackles high levels of debt, insufficient revenue collection, and depreciation of the Lao currency kip, according to the latest report published by the World Bank on Monday.

“Insufficient investment in education, training, and healthcare undermines long-term inclusive development and denies people the skills and good health that they need to escape poverty,” said the World Bank report.

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The report examined Lao public finances, presented an analysis of government revenue and spending, and made recommendations on generating sufficient resources to invest in health, education and other sectors critical to development and prosperity.

“Changes in fiscal policy could help address economic instability, protect affected populations, stimulate growth, and reduce poverty and inequality,” said the World Bank country director for Myanmar, Cambodia and Laos Mariam Sherman.

The report found that Laos’ current economic instability largely results from insufficient revenue and accumulated debt. There is also a need for the Southeast Asian country to improve the efficiency of public expenditure and tackle the potential costs of state-owned enterprises and public-private partnerships, according to it.

In addition, revenue collection is still not high, and social spending is insufficient, so the impact of the fiscal system on poor families is limited and the effect of government policies on poverty reduction and inequality is minimal.

The World Bank’s report concluded that there is considerable scope for improving revenue collection and the effectiveness and equity of public spending. It detailed measures for enhancing tax collection, reforming the management of state-owned enterprises and public-private partnerships, and targeting public spending more efficiently.