General InterestLao Economy

State Employees’ Salaries To Go Up As Planned

Salaries for state employees will increase by 1,900 kip per index as planned next fiscal year, which will begin in October, despite current budget tension.

At its ongoing fifth ordinary session the National Assembly approved in principle the state budget plan for the next fiscal year giving a green light for the government to spend up to 29,580 billion kip or 32.63 percent of gross domestic product (GDP) for total spending next year including salary expenditure.

The plan also requires the government to collect revenue of at least 25,047 billion kip, which represents 27.63 percent of GDP in order to secure funds for its spending requirements.

Laos’s this fiscal year GDP is expected to reach 80,340 billion kip (US$10.4 billion) or 8 percent growth. During the first six months this year, the government collected revenue as high as 12,242 billion kip or 51.09 percent of annual plan.

In a meeting with the government cabinet in June, the NA’s standing committee proposed to cut the salary increase plan to only 1,000 kip per index instead of 1,900 kip for the first six months in an effort to relax the budget tension and then consider the matter again later for the second six months.

“The Prime Minister confirmed that the state budget is capable of paying out the increased salaries as planned,” Chairwoman of the NA’s Economic, Planning and Finance Committee, Dr Souvanpheng Bouphanouvong told the Vientiane Times yesterday.

She cited the confirmation made by Prime Minister Thongsing Thammavong at the June meeting in Vientiane.

Dr Souvanpheng stated that the next fiscal year’s budget plan approved by the NA covers the additional spending on the salary increase as planned. The original increase was stated in the Prime Ministerial decree, which announced increases to the salaries of state employees for three consecutive years, beginning this fiscal year.

The budget tension has largely been caused by the massively increased spending of almost 140 percent for salaries and allowances.

In a separate meeting held in early June in Thalath, Vientiane province, the Director General of the Finance Ministry’s Budget Department, Mr Saisamone Xaysoulien, told the NA’s members that 140 percent is a big financial burden.

He warned the government to tighten state spending, cut unnecessary and duplicated expenditure to enable the government to meet its spending requirements amid budget tension. Cuts he recommended included reception spending and allowances for those officials traveling to work in local areas.

In one month almost 700 billion kip is spent on salaries and supporting allowances to state employees across the country.

More than 2,000 billion kip will be required to cover the salary rises next fiscal year, Mr Saisamone said, adding that only the salary will be increased next year. The allowances will not be rising.

According to the Prime Ministerial Decree, the salary rose from 3,500 kip last fiscal year to 4,800 kip per index this fiscal year (a 37 percent increase), it will rise further to 6,700 kip per index next fiscal year (91 percent), and to 9,300 kip per index in 2014-15 (165 percent).

The decree also granted an allowance of 760,000 kip per person per month to cover the cost of electricity, water, and clothing.

Published with the permission of Vientiane Times