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Govt To Mobilise More Funds To Repay Debts, Address Fiscal Deficit

Source: Vientiane Times

The government plans to mobilise 41.15 trillion kip to address the projected fiscal deficit and repay domestic and overseas loans by the end of 2023, according to a senior official.

Of the total figure, 36.1 trillion kip will be required to pay back domestic and overseas loans, the Minister of Finance, Mr Bounchom Ubonpaseuth, told the National Assembly recently.

The remaining 5.05 trillion kip will be sourced for addressing the fiscal deficit, he said.

“The amount of money to repay loans [for 2023] has increased, compared to the figure reported in the previous year, due to debt deferrals granted in the year before and the depreciation of the Lao kip,” Mr Bounchom said. 

The surge in financial liabilities has ramped up pressure on the government to seek more funds to address the budget shortfall and repay public debts.

According to the World Bank, Laos’ public and publicly guaranteed debt was expected to surpass 100 percent of gross domestic product (GDP) by the end of 2022.

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The government has assured the National Assembly that it will do all it can to repay the debts owed to foreign countries and to avoid default.

Of the total of 41.15 trillion kip, 10.95 trillion kip will be sourced by issuing domestic bonds and borrowing from internal sources. For instance, a bond worth 2.7 trillion kip will be issued via the security market. 

Mr Bounchom said the government plans to mobilise 30.2 trillion kip from foreign countries, with 6.6 trillion kip expected to be borrowed for development projects.

A total of 23.5 trillion kip will be sourced through issuing bonds in foreign countries, and concession fees charged from electricity transmission, hydropower and mining projects. These funds will be used to repay the principal of loans owed to foreign countries.

The Ministry of Finance has set a target of 38.44 trillion kip for revenue collection in 2023, an increase of 21.70 percent compared to the figure recorded in the fiscal year 2022. The government plans to spend 43.49 trillion kip, with a fiscal deficit of 6.6 trillion kip for 2023.

However, the government expects to have a budget surplus of 1.55 trillion kip as domestic revenues will exceed domestic expenditure during 2023.

The real budget deficit will reduce to 5.05 trillion kip, equal to 2.16 percent of the GDP.

The government has acknowledged that Laos will continue to face economic and financial difficulties as a result of complex changes across the world.

The government has pledged to boost revenue collection while reducing expenditure on non-essential projects, and enhance the effectiveness of its expenditure to ease the burden on its finances.