Lao Economy

State Employee Yearly Salary Increase Suspended

State employees’ salaries will not increase in the next fiscal year as originally planned, a senior government official has confirmed.

The salary increase will not go ahead due to the current budget tensions, with the government exercising cautious spending and cuttin g unnecessary expenditure.

Spokesman and Head of the Office in the Ministry of Finance Mr Bounzoum Sisavath made the confirmation yesterday following the National Assembly’s (NA) approval of next fiscal year’s budget plan.

The plan was approved at the conclusion of the ordinary session on Friday.

The budget plan set an expenditure of 31,000 billion kip, or 30 percent of Gross Domestic Product (GDP), for the next year. The salary index will remain unchanged from this year’s rate.

According to the Prime Ministerial Decree issued previously, the salary index for state officials was set to increase from 6,700 kip per index point to 9,300 kip per index point, beginning in October point.

However, the government recognised the need for the salary index level to remain the same in order to ease financial tension.

The current financial difficulty has seen the government exercising measures such as cutting unnecessary spending, with more than 200 state investment projects suspended this fiscal year.

The Ministry of Finance’s Budget Department said the government’s previous decision in the 2012-13 fiscal year to increase the salary of civil servants had placed a heavy burden on the state budget.

The Prime Ministerial Decree indicated that the salary index rose from 3,500 kip in the 2011-12 fiscal year to 4,800 kip per index point in the 2012-13 fiscal year, while rising further to 6,700 kip in the current fiscal year.

The decree also granted an allowance of 760,000 kip per person per month to cover the cost of utilities such as electricity, water and clothing. However, this was suspended at the beginning of this fiscal year.

The government admitted that they had miscalculated their budget capacity and salary spending requirements when considerations were being made. The government was also unable to collect revenue in accordance with the plan due to revenue leaks.

According to an official report, in the first half of this year the government collected just over 9,221 billion kip or 36.5 percent of the annual plan. This fell short of their six-month target by a considerable amount.

Currently Laos has around 156,000 civil servants.

Source: Vientiane Times