Lao Economy

Govt Mulls Suspending Salary Increase

The government is considering whether to suspend the salary increase for state employees scheduled to come into effect next year amid the current budget tensions, according to a draft budget plan from the Ministry of Finance.

Next fiscal year’s draft budget plan was tabled at the ongoing meeting between the government cabinet, the Vientiane Mayor and provincial governors being held at the Government Office.

It suggests that salaries should remain at their current level of 6,700 kip per salary index point – the same level being paid this fiscal year.

The Prime Ministerial Decree issued previously states the salary index of state officials would increase from 6,700 kip this fiscal year to 9,300 kip per index point next fiscal year.

The draft is on the agenda at the ongoing meeting between the government cabinet, the Vientiane Mayor and provincial governors.

An official from the Finance Ministry said the draft plan would be submitted to the National Assembly’s bi-annual ordinary session to seek approval from the parliament. The convention should take place in June.

The consideration being given to not increase state salaries comes after the government has faced financial difficulties in recent times due to failing to collect taxes and revenues according to plan.

Such budget tensions have already seen the government suspend paying the monthly supporting allowance of 760,000 kip for state officials, which came into effect at the beginning of this fiscal year (October 2013) after it awarded the allowance one year earlier.

Salary payment for state officials has also been slow with officials in some sectors not having received their salaries for a number of months.

In addition, more than 200 state investment projects were also suspended this fiscal year in order to relax the financial tensions.

The government explained previously that the current financial difficulties stem from several factors including the fact that the government has failed to collect revenue as planned due to leaks in revenue collection.

The huge salary increase and supporting allowance which saw the salary of state employees go up by more than 100 percent last fiscal year was another contributor to the budget tensions.

Over the first half of this year, the government has collected just over 9,221 billion kip or 36.5 percent of the annual plan, falling short of the first six-month target by a considerable margin.

Meanwhile, spending amounted to some 7,771 billion kip or only 26.1 percent of the annual plan.

The Ministry of Finance estimates it will be able to collect revenue of more than 13,641 billion kip for the remaining six months, equivalent to 59.6 percent of the annual plan, while spending is expected to be around 21,973 billion kip or 73.8 percent of the annual plan.

Source: Vientiane Times