Public debt in Laos is ‘manageable’ because the government has measures in place to effectively cope with it, Lao Prime Minister Thongloun Sisoulith said in an interview with the Nikkei Asian Review last week.
The prime minister, who was visiting Japan for the Future of Asia conference, said Laos is currently in debt to multiple countries and organisations including China, Japan, Vietnam and the World Bank.
At the end of last year, Laos’ public debt rose to about $9.761 billion. This was a 14.02 per cent increase over the amount owed in 2017, according to the Bank of the Lao PDR.
National debt represents 53.34 per cent of the country’s GDP. China, Thailand and Russia are Laos’ biggest lenders in money terms through bilateral loan agreements.
The government believes that borrowing is necessary because Laos does not have sufficient money to properly develop the economy. “If we don’t borrow, Laos, as a least developed country, won’t develop further,” the Nikkei quoted Thongloun as saying.
He said the Lao government only borrows money for “high-efficiency projects which are long-term, with low interest rates”.
Meanwhile, the government has reined in spending and proposed projects that are not considered to be highly essential have been suspended.
Since 2013, the International Monetary Fund has been raising doubts about Laos’ ability to pay back its debts because of its moves to build the Laos-China railway and some other capital-intensive projects, the Nikkei said.
Thongloun strongly denied concerns raised by many observers about a Chinese “debt trap”, saying that observers who have concern for Laos in terms of debt repayment may not have enough or sufficient information on how the government assesses those projects.
The government attaches great importance to the $5.986 billion Laos-China railway. It is hoped that this major infrastructure project, which will help transform Laos from a landlocked country into a land link, will bring further trade and investment opportunities to Laos.
Earlier, Thongloun told the Future of Asia conference, which took the theme Seeking a New Global Order – Overcoming the Chaos, that the Belt and Road Initiative was a good cooperation mechanism. VIENTIANE TIMES/ASIA NEWS NETWORK