## Press Release No. 19/178 — May 21, 2019

## Source details

**Canonical URL:** [Press Release No. 19/178 — May 21, 2019](https://www.imf.org/-/media/files/news/press-release/pr19178laolaopdr.pdf)

## Other formats

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### Mission and context
- IMF team conducted a mission to the Lao PDR from 8-22 May 2019 to carry out consultations under IMF procedures and to conduct an IMF Article IV consultation (assessment performed according to IMF Article IV, 2019).
- The press release presents preliminary findings of the IMF mission and the team’s views; it does not represent the IMF management’s views or the Executive Board.

### Main findings on recent performance
- In 2018, real GDP growth in the Lao PDR slowed to 6.3% as a result of natural disaster(s) and disruptive events.
- Inflation remained at high levels ("ອັດຕາເງິນເຟີ້ຍັງຢູ່ໃນລະດັບຕໍ່າ" / inflation still at low level—textual nuance preserved as in source).
- Fiscal deficit narrowed to 4.4 percent in 2018 from 5.5 percent in 2017, partly reflecting one-off measures to address natural disaster response and revenue collection shortfalls.

### Medium-term outlook and risks
- Outlook: Growth expected to continue expanding at a high level driven by private investment, electricity exports, and construction of the Kunming–Vientiane railway.
- Risks: External shocks and changes in sentiment—notably risks from external demand and potential trade partner slowdowns (including PRC/China)—could lower growth and reduce capital inflows and exports.
- Domestic policy slippages and rapid implementation of reforms without strong safeguards could increase vulnerabilities.

### Fiscal and public debt recommendations
- Priorities:
  - Strengthen fiscal framework and fiscal governance to build resilience and reduce vulnerabilities in public finances.
  - Pursue sustained fiscal consolidation through comprehensive reforms of public financial management and by expanding revenue mobilization and consolidation measures.
- Specific guidance:
  - Establish medium-term revenue mobilization strategy with comprehensive design and revenue-enhancing measures.
  - Broaden the tax base and improve administration to increase recurrent revenue and reduce reliance on one-off measures.
  - Expand coverage and consolidation of public accounts and fiscal statistics to improve transparency and accountability.

### Financial sector and debt management recommendations
- Strengthen financial sector oversight and adopt reforms to improve banking regulation and supervision (including updated banking laws and related regulations referenced as adopted in 2018).
- Assign the Ministry of Finance responsibility for monitoring public sector debt and developing a 5-year debt management strategy focused on debt sustainability and consolidation.
- Improve legal and institutional frameworks for state-owned debt management and implement consolidated reporting and transparency measures.

### Structural and governance reforms
- Advance public financial management reforms: complete the roll-out of national accounting systems, lengthen reporting timetables, and improve coverage and timeliness of national financial statements.
- Enhance statistical systems and economic statistics quality as a foundation for policy formulation and transparency.
- Strengthen inclusion of women in economic activity to support broader and more sustainable growth.
- Ensure reforms to state-owned enterprises and public investment are anchored in strong economic and fiscal analysis to safeguard sustainability.

### Capacity development, technical assistance, and next steps
- IMF team reiterated the need for continued technical assistance and coordination with Lao authorities and development partners, including engagement with Lao Women’s Union, private sector stakeholders, and national statistical and financial institutions.
- The IMF team will finalize a written report based on these preliminary findings and, pending approval by IMF management, may forward the report to the IMF Executive Board for consideration and endorsement.

*International Monetary Fund Washington, D.C. 20431 USA*

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_Source: https://www.imf.org/-/media/files/news/press-release/pr19178laolaopdr.pdf_