Lao EconomyTax

New State Projects Threaten Budget Blowout

Source: Vientiane Times

New project proposals for 2018 submitted by State sectors and provincial authorities threaten to incur costs higher than the government’s financial capacity, a senior official has noted.

To avoid accumulation of rising debts, the government has called for all State organisations to propose only necessary projects which are critical for the development of their sectors.

Minister of Planning and Investment Dr Souphan Keomixay recently agreed that the demand for national development is rising.

Nevertheless, authorities in Vientiane and the provinces need to prioritise their state investment projects in response to the needs for national development and poverty reduction of local people.

Concerns have been raised about provincial projects in which their number and costs have been loaded up in an attempt to extract ambit claims from the government.

Critics argue that many of these projects are unnecessary or offer poor value for money and are only put forward in the hope of receiving more funds.

As of August 31 this year, 16 ministries/ministry equivalent organisations and five provinces submitted 1,095 project proposals at a total cost of over 7.93 trillion kip to the Ministry of Planning and Investment.

Meanwhile, the Ministry of Planning and Investment called for all sectors to submit their project proposals and funding demands within September so the government could propose those projects to next month’s National Assembly session.

Failure to submit proposals could delay project implementation since only those approved by the parliament can be given the ‘go ahead’ and will be carried out for the start of 2018.

In previous years, the government approved a number of projects related to the construction of new public offices, roads, bridges, irrigation systems and power transmission lines.

Dr Souphan recommended for State sectors to diversify projects into other areas while concentrating existing funding to complete the above infrastructure projects.

Concerning technical development, the government told State sectors to ensure that projects don’t overlap one another. Critics say it’s also vital to thoroughly inspect State investment projects given that many in the past had construction cost blowouts.

For 2017, the National Assembly approved over 5.46 trillion kip for State investment projects. Of the total figure, 3.3 trillion kip is sourced from the State budget to carry out 6,497 projects.

Over the first six months of this year, 3,592 projects worth over 1.78 trillion kip have been completely implemented, equal to 32.6 percent of the yearly plan.

The government will allocate 3.8 trillion kip which will be sourced from the State budget to carry out development projects in 2018. In addition, the government will source another 9.09 trillion kip from Official Development Assistance (ODA) to carry out projects to boost economic growth to at least 7 percent next year.