Minister: Debts mounting but Laos won’t default

THE annual amount of debt-service payment has risen from US$1.2bil in 2018 to US$1.4bil this year, a top government official has revealed.

Minister of Finance Bounchom Ubonpaseuth clarified the main reasons for the nation’s growing public debt and possible solutions to the problem when addressing National Assembly members on Monday.

The minister assured the NA that the government would not allow the country to slide into default.

“Huge debts have been accumulated following massive loans borrowed for national development between 2010 and 2016,” the minister told the ongoing 3rd Ordinary Session of the NA’s 9th legislature.

“In 2010, our external debt-service payments amounted to just US$160mil, which could be paid for out of domestic revenue.”

Bounchom attributed the main reason for the growing public debt to the high demand for capital needed to develop Laos, one of the world’s least developed countries.

“Over the past 47 years, Laos has borrowed about US$5bil to invest in infrastructure and roughly US$4bil to invest in commercial production for export purposes. These loans were necessary for the development of our country in past years,” he said.

In 2020, total public and publicly guaranteed debt stock stood at US$13.3bil, accounting for 72% of GDP, according to the Ministry of Finance’s public debt bulletin.

A World Bank report issued in May stated that public and publicly-guaranteed debt increased to 88% of GDP in 2021, with the energy sector accounting for over 30% of the debt stock.

Bounchom assured the NA that domestic revenue is now sufficient for domestic expenditure, notably for administrative work, the payment of salaries and allowances to state officials, and for domestic investment.

However, a number of Assembly members raised questions on possible income streams and how the government would lessen the debt burden. — Vientiane Times/ANN