Source: Vientiane Times
The impact of the coronavirus on the economy has driven revenue collection back by three years, the deputy prime minister has told the National Assembly (NA).
Addressing the ongoing 10th ordinary session of the NA’s 8th legislature last week, Mr Somdy Duangdy said the amount of revenue forecasted for collection in 2020 was now similar to that in 2017.
Striving to meet 2020 budget targets ‘is ambitious and challenging’, although the budget plan has been revised to reduce both revenue and expenditure targets, he added.
In June, parliament approved a revised budget plan which lowered the total revenue target to 22,725.46 billion kip, while the expenditure target was reduced to 33,043 billion kip.
Initial data showed that as of October 26 revenue collection had reached at least 68 percent of the planned 22,725.46 billion kip, the deputy prime minister, who is also Minister of Finance, told the Assembly.
Previous statistics coupled with the probability that the pandemic will continue to damage the economy mean that this year’s revenue target is unlikely to be met.
“In previous years, we have been able to fully meet the revenue target when there was about 20 percent left to accrue during the last two months of the year,” Mr Somdy said.
This year there is still 32 percent of the targeted revenue to be collected.
The deputy prime minister responded to questions raised about whether the government would be able to achieve the target given the devastating impact of the pandemic.
“We have already assured the National Assembly that we will strive to meet the target. It is a challenge to see whether we can do this or not,” Mr Somdy said. The impact of the pandemic on the economy has been more severe than expected. Authorities originally predicted the virus outbreak would dominate the first six months of this year and that things would gradually return to normal during the last two quarters, he added.
“In fact, that’s not what has happened. Our neighbouring countries and many countries around the world continue to be deeply affected by the Covid-19 outbreak. Its impact has been prolonged,” he said.
“We previously predicted that revenue generated by the service sector would gradually build up at the end of this year but at present it can be said that revenue earned from foreign tourists is still zero.”
The impact on the tourism industry – the hardest hit sector – has affected related businesses.
“This impact will inevitably affect next year’s budget plan,” Mr Somdy said.
He vowed to do everything possible to maximise revenue collection and eliminate the causes of revenue leaks.
The pandemic has resulted in multimillion-dollar losses for the tourism industry.
The tourist hotspot of Luang Prabang province alone has recorded losses of about US$20 million after tour and hospitality businesses had numerous cancellations, according to President of the province’s Chamber of Commerce and Industry, Mr Bounthieng Soulivan, citing initial information received from business operators.
Revenue shortfall has inevitably greatly affected spending. Over the first nine months of this year, state expenditure reached 17,902 billion kip, accounting for just 54.18 percent of the revised expenditure plan.
But despite the damage suffered, Prime Minister Thongloun Sisoulith told parliament the government predicts that the economy will grow by 3.3 percent this year, the same growth rate that was forecast in June.