Govt Sources More Funding To Tackle Deficit

Source: Vientiane Times

In the wake of continuing revenue shortfall, the government is planning to secure more than 7.35 trillion kip this year to cover its expenditure needs.

Over the past four months, the government has sourced 679 billion kip from various entities, equaling 9.2 percent of the target figure, according to the latest report from the Ministry of Finance, published this week.

The government is hoping to collect 25.45 trillion kip in revenue this year, an increase of 6.31 percent compared to 2017.

Meanwhile, expenditure is set at 32.8 trillion kip, an increase of 1.26 percent on last year.
Over the past four months, revenue collection has reached 5.29 trillion kip, equal to 20.81 percent of the figure targeted for the whole of 2018.

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However, only 4.61 trillion kip has been disbursed during this period, amounting to just 14 percent of the planned expenditure figure.

Finance officials said the government is trying to obtain more funding from loans, the issue of bonds and other sources. This is aimed at sustaining economic growth and spurring the development process.
In May 2017, the Ministry of Finance announced it had sourced 2.44 trillion kip to pay off the budget deficit incurred in the first quarter of that year. Of this amount, 592 billion kip was sourced from loans to fund development projects and the rest came from domestic sources.

Despite budgetary tensions, the government has made it a priority to use its budget to pay salaries and allowances to state employees while the rest will be used to fund state investment projects and the government’s administrative affairs.

More than 50 percent of domestic revenue is allocated to the payment of officials’ salaries and allowances.

The government cut the number of civil servant recruits from 5,000 in 2017 to 3,000 in 2018 so that more money could be freed up to improve education and healthcare and bolster economic and poverty reduction activities.

In the first quarter of this year, more than 2.1 trillion kip was spent on officials’ salaries and allowances. However, payments have been delayed in some areas because of the slow processing of documents and issues relating to the shortfall in revenue.

Economists say the revenue shortfall could further impact the economy because the government has not promptly paid companies who carried out state investment projects so these firms have not had sufficient capital to grow their business operations.

Critics say it’s vital to boost national revenue and improve the business environment as well as promote private sector investment in Laos, so that new sources of revenue can be tapped. Laos has the potential to collect more revenue but all sectors need to work together to properly address the challenges and issues surrounding financial leakages.