Press Release No. 16/398

Statement by IMF Managing Director Christine Lagarde at the Conclusion of her Visit to Lao P.D.R.

September 8, 2016

• Lagarde thanks Lao P.D.R.’s officials for warm hospitality, fruitful exchange of views.
• Lagarde urges ASEAN countries to implement monetary and fiscal policies that support growth, with more flexible exchange rates to help manage risks from financial volatility and subsidy reforms.
• Lagarde says the growth in Lao P.D.R. has been impressive; advocates to keep momentum of fiscal consolidation, diversify the economy, while distributing the benefits more widely.

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today at the conclusion of her visit to Lao P.D.R.:

“I wish to thank Prime Minister Thongloun Sisoulith, Deputy Prime Minister and Minister of Finance Somdy Douangdy and Central Bank Governor Somphao Phaysith and other senior government officials for their warm hospitality and fruitful exchange of views during my visit to Laos.

“During my stay, I attended the ASEAN Business and Investment Summit on ASEAN Economic Development Perspectives and met with ASEAN Heads of State, as well as government officials from Lao P.D.R.

“ASEAN has growing economic and strategic importance, being located in a region featuring ample natural resources and emerging middle classes. ASEAN has achieved rapid rates of growth of around 5 percent in recent years through a shift to domestic-led growth, while maintaining open markets and continuing gradual regional integration. However, while growth, structural transformation, and regional integration are all ongoing, convergence in real per capita incomes has been slowing, both within ASEAN and between ASEAN and advanced countries. To foster further real income convergence, ASEAN countries need to implement growth-supporting monetary and countercyclical fiscal policies with more flexible exchange rates to help manage risks from financial volatility and subsidy reforms. Increased and evenly distributed infrastructure spending together with enhanced legal frameworks for private participation are also key as well as the strengthening of public education systems. Developing deep domestic financial markets, building resilience and expanding financial access should also be a priority.

“Lao P.D.R.’s economic growth also has been impressive but domestic and external vulnerabilities remain. To safeguard macroeconomic stability during the transition out of low-income country status, it will be important to maintain the momentum of fiscal consolidation to reduce public debt and diversify the economy. Implementing fiscal reforms including on tax policy and administration, public financial and debt management will make the public sector more efficient. Continued investments in education and health will set the conditions for productivity growth and export diversification, while distributing the benefits more widely. It will also be necessary to continue to accumulate international reserves and address weaknesses in the banking system and improve supervision. These actions will help the Lao P.D.R. economy continue its path of robust growth in a sustainable and stable manner.”

“Once again, I would like to thank the authorities and the people of Lao P.D.R. for their hospitality and look forward to continuing our close cooperation.”