Press Release: IMF Executive Board Reviews Lao People's Democratic Republic's Poverty Reduction Strategy Paper and Joint IMF-World Bank Staff Advisory Note
December 1, 2004
The Executive Board of the International Monetary Fund (IMF) reviewed on November 29, 2004 Lao P.D.R.'s National Growth and Poverty Eradication Strategy (NGPES) and the Joint Staff Advisory Note for the NGPES, which was prepared jointly by the staff of the IMF and the World Bank.
At the conclusion of the Board discussion, Agustín Carstens, Deputy Managing Director and Acting Chair, stated:
" Lao P.D.R.'s National Growth and Poverty Eradication Strategy (NGPES) lays out a comprehensive strategy to sustain economic growth and reduce poverty, and was prepared in consultation with a broad range of stakeholders. The strategy is built on three pillars—fostering economic growth with equity, modernizing the country's social and economic infrastructure, and enhancing human resource development. It appropriately recognizes the importance of maintaining macro-fiscal sustainability, improving the business environment, strengthening public financial management, and accelerating structural reforms to achieve sustainable growth.
" The challenge for the authorities is to rapidly start implementing the necessary reforms outlined in the NGPES. Key reforms are those needed to enhance revenue mobilization through the centralization of customs and revenue administration; put state banks and state-owned enterprises on a sound commercial footing; improve public expenditure management; and strengthen governance to create an environment favorable to private sector development. While carrying the reform agenda forward, it will be essential to closely align necessary social expenditures with realistic projections of budget revenues and available financing sources.
" Strengthening government ownership of the reform program is essential to ensuring full consistency between the NGPES and government policies. Implementation of the strategy will also require a clear assignment of responsibility and accountability for policy implementation between institutions and levels of administration.
" Continued financial and technical assistance from Lao P.D.R.'s development partners will be essential for the success of the NGPES, given the country's capacity and resource constraints. At the same time, the government will need to improve its external debt management system, while closely monitoring the average level of concessionality of new borrowing, to ensure that Lao P.D.R.'s high debt burden is lowered over the medium term. Despite its eligibility, Lao P.D.R does not intend to avail itself of debt-relief under the enhanced HIPC Initiative, " Mr. Carstens said.