VIENTIANE: The government has assured lawmakers that it has secured sufficient funding to meet foreign debt repayment obligations due in the second half of 2026, while continuing efforts to reduce public debt and maintain budget stability through tighter borrowing controls, stronger domestic revenue collection, and diversified financing sources.
Responding to questions raised by members of the National Assembly during its ongoing Extraordinary Session on Wednesday (July 8), Deputy Prime Minister Santiphab Phomvihane outlined a series of measures to ensure the country meets both principal and interest payments without undermining fiscal stability during the final six months of the year.
Santiphab, who is also Minister of Finance, said the ministry has already secured funding sources to guarantee repayment of foreign debt obligations in accordance with contractual commitments, including 6,649 billion kip in domestic revenue.
Additional financing will be mobilised through the issuance of government bonds on the Lao Securities Exchange, as well as selected foreign bond offerings, to strengthen the country’s debt repayment capacity.
The minister said the government’s broader debt management strategy focuses on lowering public debt to a safe and sustainable level while preventing any risk of debt default.
“Regarding public debt resolution overall, the Ministry of Finance has focused on reducing public debt to a safe level, decisively avoiding a situation where the country is unable to repay its debts,” Santiphab said.
To achieve this, the Ministry of Finance has tightened controls on new borrowing for development projects and government guarantees for state-owned enterprises.
At the same time, it has expanded non-loan financing sources by strengthening revenue management, improving fiscal discipline and mobilising potential state assets to support debt repayment.
Since 2021, the ministry has adopted a budget planning approach that ensures domestic revenue consistently exceeds domestic expenditure, allowing surplus funds to be directed towards repayment of both domestic and foreign debt principal.
Santiphab said this policy has played a key role in significantly reducing Laos’ public debt burden, with the public debt-to-GDP ratio falling from 112 percent at the end of 2022 to 84 percent by the end of 2025.
Looking ahead, the ministry remains committed to further reducing public debt in line with the National Assembly’s fiscal targets, which sets a goal of lowering public debt to no more than 70 percent of GDP.
The government plans to use domestic revenue to repay at least US$1.5 billion in foreign debt principal.
The government says the combination of prudent borrowing policies, stronger revenue mobilisation, disciplined budget management and diversified financing mechanisms will help maintain fiscal stability while meeting debt-service obligations and supporting Laos’ long-term economic sustainability. - Vientiane Times/ANN
