limited to losses occurred as a result of government actions, that prevent the operation of the project. The government is currently negotiating with Russia and expects to reach an agreement on its outstanding ruble-denominated debt in 2001. The Laoauthorities are still gathering detailed debt data before deciding whether to apply for debt relief under the HTPC Initiative. Preliminary staff estimates for end-2000 put the net present value (NPV) of debt at about 250 percent of exports of goods and services ( Table 8 ), 160 percent after traditional debt
Fund operations (in SDR millions)
Kip per U.S. dollar (end of period) 5/
Commercial bank rate
Parallel market rate
Sources: Data provided by the Laoauthorities; and staff estimates and projections.
1/ Fiscal data are on a fiscal year basis (October-September).
2/ GDP figures for 1998 have been revised.
3/ Excludes debt to nonconvertible area; includes debt
This report discusses major developments in the Lao People’s Democratic Republic (PDR), and updates the statistical tables on recent economic developments and provides an overview of the real sector. Factors that have limited revenue collections and developments in the monetary and financial sectors have been presented. The paper discusses the weakness of monetary policy as well as the financial sector and recent efforts to reform the banking system. Foreign direct investment and foreign exchange regime in Lao PDR have been examined.
the sale of the commercial operations of enterprises slated for restructuring to recover nonperforming loans of the SCBs.
Directors supported ongoing trade reforms, as well as the continuation of the flexible exchange rate system, which, along with continued efforts to reduce structural impediments, will be key to preserving external competitiveness. They encouraged the Laoauthorities to accept the obligations under Article VIII as soon as possible. Some Directors recommended that the implications of the high dollarization of Lao P.D.R.’s economy be kept under
The economic growth of Lao P.D.R. was buoyed by mining and hydropower sectors, garment exports, non-regional tourism, and FDI inflows following the recovery from the global economic crisis. The Bank of Lao P.D.R. (BoL) also raised its overdraft lending rate. Net domestic assets of the BoL continued to expand rapidly net injections of liquidity into the banking system, and an expansion of other assets. Medium-term economic prospects, macroeconomic and financial policies, accelerated structural reforms to diversify the economy, improve the business climate, and foster trade.
This paper describes economic developments in Lao People’s Democratic Republic (PDR) during the 1990s. Economic reforms in Lao PDR that started in 1986 were supported by IMF arrangements in 1989–97. During those years, the economy grew annually at 5 percent to 8 percent and through prudent macroeconomic policies, the government managed to achieve broadly stable macroeconomic conditions. Meanwhile, structural reforms took shape, so that market processes are now at work in most segments of the economy. However, in 1997, economic conditions deteriorated and progress in structural reform slowed significantly.
Categories, First Six Months of 1997/98
(In Percent of Revised Budget)
Sources: Data provided by the Laoauthorities; and staff estimates.
LAO P.D.R.: REAL GDP AND MAIN ECONOMIC SECTORS, 1993-97
Source: Data provided by the Laoauthorities; and staff estimates.
Lao P.D.R.: Selected Economic and Financial Indicators, 1993–97
Nominal GDP (1996): $1,846 million
Population (1995): 4.8 million
GNP per capita (1995): $374
Fund Quota: SDR 39.1 million
Growth (percent change
We would like to thank staff for the well-written papers on the Article IV consultation on Lao and their recommendations for the approval of a three-year PRGF arrangement for Lao P.D.R. Our Laoauthorities would also like to express their appreciation to the management and staff of the Fund for their continued support and policy advice. They broadly agree with the staffs comments and assessment of recent developments in Lao P.D.R as well as their policy recommendations.
Recent economic development and immediate macro-economic outlook
Over the past decade
In 1992, the fiscal year was changed to October 1-September 30. 1991/92 (October-September) was included for purposes of comparison.
Minus sign indicates net payment for clearing arrears.
Initial Weakness of Fiscal Policy
Until 1989, when the SAF-supported program was put in place, fiscal policy had not been effective because available information on the budget was insufficiently accurate, owing primarily to the severe