## IMF Staff Completes 2025 Article IV Mission to Lao PDR

_IMF News, November 19, 2025_

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## Bibliographic details
- Published: November 19, 2025

---

### Mission summary
- An IMF team led by Ms. Angana Banerji conducted discussions for the 2025 Article IV Consultation during November 5-19, 2025.
- Press Release No. 25/380.
- The statement reflects IMF staff’s preliminary findings; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

### Macroeconomic outlook and key projections
- Growth:
  - Growth is projected to remain robust at 4.5 percent in 2025−2026.
- Inflation and monetary conditions:
  - Rapid disinflation has occurred; headline inflation is projected to rise gradually in 2026, driven by planned fiscal support and further electricity tariff increases.
  - Monetary policy recommendation: remain on hold with a tightening bias.
- External sector:
  - The current account surplus is expected to narrow from its 2025 peak, though external balances should remain stable, supported by stable FDI inflows.
- Reserves and external debt:
  - Underlying vulnerabilities include low international reserves and high public and private external debt.

### Risks and vulnerabilities
- Near-term risks are tilted to the downside, including:
  - Escalating geopolitical tensions.
  - Commodity and global financial market volatility.
  - Premature policy easing.
  - Natural disasters.
- Financial sector vulnerabilities:
  - Weak profitability and capital buffers in key segments of the banking system leave it vulnerable to adverse shocks.
- Structural and exposure risks:
  - High import dependence and significant exposure to external shocks.
- Upside potential:
  - Ongoing regional integration, if well implemented, poses upside risks for growth and external balances in the medium term.

### Policy recommendations — monetary and exchange rate
- Monetary policy:
  - Remain on hold with a tightening bias because monetary conditions are still accommodative and inflation risks persist.
  - Maintain the policy rate while advancing liquidity management reforms to help raise real interest rates and ensure that monetary conditions remain tight.
- Exchange rate and reserves:
  - Allow the exchange rate to act as a shock absorber, while building reserves when feasible, to strengthen resilience given high external debt, import dependence, and vulnerability to external shocks.
- Data and management:
  - Improve external and debt statistics, including state-owned enterprise (SOE) debt, for effective FX and debt management.

### Policy recommendations — fiscal and public finance
- Fiscal stance:
  - The draft 2026 state budget signals a marked easing of the fiscal stance due to higher wages and capital outlays.
  - Recommendation: a more modest fiscal relaxation—supported by concrete plans to strengthen revenue collection—would be preferable to create space for additional priority social and infrastructure spending.
- Revenue measures:
  - Additional revenue measures are needed, including:
    - A strengthened large taxpayers office.
    - Reductions in corporate tax gaps.
    - Rules-based tax incentives.
    - Taxation of emerging sectors.
- Debt management and PFM:
  - Continue progress in debt management, transparency in asset sales, and public financial management, including an upgraded public-private partnership framework.

### Policy recommendations — financial sector and SOEs
- Financial stability:
  - Safeguard financial stability by closely monitoring liquidity and solvency conditions based on sound financial sector data and stress-testing frameworks.
  - Continue efforts to strengthen supervision, bank capital and liquidity positions, and prudential frameworks to support financial sector resilience.
- SOE reforms:
  - Progress in improving SOE balance sheets would help reduce credit risks over time.
  - Deepen SOE reforms through improved operational efficiency, stronger oversight, disclosure, and modernized regulatory frameworks to reduce fiscal risks.

### Structural reforms to boost medium-term growth
- Priority areas:
  - Improve the business environment, human capital, and governance to help lift potential growth toward the government’s target.
- Specific measures:
  - Enhance transparency, inter-agency coordination, data quality, and public access to information to strengthen accountability and policy making.
  - Upgrade and streamline regulations and reinforce anti-corruption frameworks to boost productivity.
  - Diversify export products and markets and boost tourism through better connectivity and by easing entry requirements.

### Engagements and acknowledgements
- The IMF team met with officials from the Bank of the Lao PDR, government ministries, other public agencies, representatives of the private sector, and development partners.
- The team expressed thanks for the productive discussions and exceptional hospitality.

*IMF Communications Department — November 19, 2025.*

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## References

- [Lao People's Democratic Republic and the IMF](http://www.imf.org/external/country/LAO/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
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_Source: https://www.imf.org/en/news/articles/2025/11/19/pr-25380-lao-pdr-imf-staff-completes-2025-article-iv-mission_