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Mr. Geoffrey J Bannister, Mr. Manuk Ghazanchyan, and Theodore Pierre Bikoi
This paper assesses external trade statistics in Lao PDR by looking at mirror statistics, and with reference to international experience in compilation and dissemination of external trade data. We find that exports could be underreported by 8 to 50 percent, while imports could be underreported by 30 to 70 percent, and the trade deficit could be 20 percent to 280 percent higher. Underreporting is concentrated in trade with major partners, including Thailand (17 percent of total trade), China (10 percent of total trade) and Vietnam (3 percent of total trade). On the export side, underreporting is concentrated in wood and wood products, while for imports it is concentrated in a much wider variety of products, including food, fuel, vehicles, machinery, chemical products, plastics and rubber, and construction materials. Possible sources and implications of these discrepancies are discussed.
Mr. Geoffrey J Bannister, Mr. Manuk Ghazanchyan, and Theodore Pierre Bikoi

imports . Using the authorities’ data, reserves are at five months of imports and only slightly below the optimal level according to the IMF’s reserve metric. Using partner country imports indicates that reserves are at 1 month of imports and metrics are well below optimal levels. Figure 4. Lao P.D.R Reserve Adequacy based on IMF ARA (percent of GDP) Source: Lao PDR authorities including Bank of Lao, Direction of Trade Statistics (DOTS), IMF and COMTRADE, United Nations. VIII. Conclusions In this paper, we have pointed to general weaknesses in

International Monetary Fund. Asia and Pacific Dept

and the international market rate. Lao P.D.R.: Reserve Adequacy Assessment (In months of imports) Source: IMF staff calculations; and National authorities. 15. Monetary and exchange rate policy recommendations . Strengthening the monetary policy regime will allow more exchange rate flexibility in the medium-term and reduce banking sector vulnerabilities: Modernizing monetary governance . A new legal framework for the BOL Law, Commercial Bank Law, and Law on Payment Systems were all adopted in 2018. The implementation of the new legal framework

International Monetary Fund. Asia and Pacific Dept

. 17. Authorities’ views . The authorities consider the level of reserves to be adequate, although they agree that a higher level would further safeguard stability. The central bank calculates reserves at end-2015 at 6.4 months of imports due to a different estimate of trade flows and the exclusion of imports related to FDI projects. 7 Using the central bank’s overall import figure, and not excluding FDI imports, puts reserve adequacy at around 2 months of imports, still well below recommended levels. Lao P.D.R.: Reserve Adequacy Calculations (End-2015

International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation with Lao People’s Democratic Republic (P.D.R) analyses that after more than a decade of high growth with low inflation, country is solidifying its progress toward graduating from the Least Developed Country (LDC) status. However, more than one-fifth of the population remains poor, regional disparities are persistent, and recurring natural disasters pose risks for poverty reduction. A large current account deficit, low level of reserves, a high level of debt, managed exchange rate, and a dollarized banking system amplify macro-vulnerabilities. The authorities recognize the current economic challenges and their comprehensive reform programs aim at rebalancing the economy from a resource based to a more diversified growth model by investing in human development and improving competitiveness. Modernizing monetary governance and building reserves supported by greater exchange rate flexibility will help to mitigate external shocks in an uncertain global environment.
International Monetary Fund. Asia and Pacific Dept
This 2016 Article IV Consultation highlights that the real GDP growth of Lao People’s Democratic Republic is expected to moderate from 7.5 percent in 2015 to 7 percent in 2016. Domestic activity has slowed following a less favorable external environment, and credit growth has also moderated from a high level. As growth continues to moderate in the near-term, inflation is projected to remain in low single digits. The current account deficit is projected to widen to about 19 percent of GDP in 2017 owing to the execution of large infrastructure projects with foreign direct investment.