## IMF Staff Concludes 2019 Article IV Consultation Mission to Lao P.D.R.

_IMF News, May 21, 2019_

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## Bibliographic details
- Published: May 21, 2019

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### Mission and statement
- Mission dates: May 8 to May 22, 2019.
- Statement date: May 21, 2019.
- Press Release No.: 19/178.
- End-of-Mission press releases convey preliminary findings of IMF staff teams; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
- IMF Communications Department — MEDIA RELATIONS: PRESS OFFICER: Ting Yan; Phone: +1 202 623-7100; Email: MEDIA@IMF.org.

### Economic performance and outlook
- 2018 economic growth: 6.3 percent (growth slowed mainly due to natural disasters and a tragic dam collapse).
- Inflation: remained low (no numeric value provided).
- Outlook drivers:
  - Expected to remain strong supported by private investment, electricity exports, and completion of the Kunming-Vientiane railway project.
  - Headline inflation is projected to remain moderate.
  - Current account deficits will persist with high import demand.

### Risks to the outlook
- Downside risks tilted to external factors:
  - A sharper than expected slow-down in China — Lao P.D.R.’s largest trading partner and FDI investor — may reduce exports and decelerate FDI inflows.
- Upside factors:
  - Faster regional growth and deepening integration within the ASEAN could boost investment, trade, and tourism.
  - Accelerated reform efforts could mitigate downside risks.

### Fiscal policy, public debt, and fiscal governance
- Fiscal deficit developments:
  - Fiscal deficit: 4.4 percent of GDP in 2018 (down from 5.5 percent in 2017).
  - Fiscal consolidation in 2018 was partly affected by spending diverted for natural disaster recovery and underperforming revenues.
- Policy commitments and priorities:
  - Government committed to gradual fiscal consolidation supported by comprehensive public financial management reforms to strengthen fiscal governance.
  - Ongoing reform priorities: implement a well-defined medium-term revenue strategy, simplify and broad-base tax legislation, and automate tax administration systems.
  - Align spending priorities with Sustainable Development Goals (SDGs) to advance inclusive development objectives and strengthen budget accountability mechanisms.
  - Promote greater participation of women in the economy to boost growth.
- Public debt management:
  - New Public Debt Management Law (2018) establishes a rules-based mechanism for contracting and guaranteeing public debt.
  - Priorities: consolidate the Ministry of Finance’s oversight powers over public debt and timely development of a 5-year strategy for debt management.
  - Government commitment to assess and target infrastructure projects with high social returns and finance these at concessional terms when possible to benefit debt sustainability.

### Monetary governance and financial sector
- Legal framework developments: New laws for the Bank of Lao P.D.R., Commercial Bank, and Payment Systems were all adopted in 2018.
- Implementation needs: develop necessary regulations, provide clear guidance, and deploy a proactive communication strategy to support the new legal framework.

### Statistics and transparency
- Improvements noted:
  - Authorities began publishing fiscal data in 2018.
  - National accounts’ timeliness, breadth, and frequency are being gradually improved.
- Remaining needs:
  - Further efforts required to bring monetary and financial sector indicators to regional reporting standards.

### Engagements and acknowledgments
- IMF team met with:
  - Deputy Prime Minister and Minister of Finance Somdy Douangdy;
  - Chair of Planning, Finance, and Audit Committee of the National Assembly Vilayvong Boudakham;
  - Governor of the Bank of Lao PDR Sonexay Sithphaxay;
  - Other senior officials, the Lao Women's Union, development partners, and representatives of the private sector.
- IMF team expressed thanks to the government and the people of Lao P.D.R. and wished them success in raising economic growth and improving livelihoods.

*IMF Staff Concludes 2019 Article IV Consultation Mission to Lao P.D.R., Press Release No. 19/178, May 21, 2019.*

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## References

- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Lao People's Democratic Republic and the IMF](http://www.imf.org/external/country/LAO/index.htm)
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_Source: https://www.imf.org/en/news/articles/2019/05/21/pr19178-lao-pdr-imf-staff-concludes-2019-article-iv-consultation-mission_