Lao PDR Strengthens Public Debt Management
VIENTIANE — The Asian Development Bank (ADB), in partnership with the Ministry of Finance of the Lao People’s Democratic Republic (Lao PDR), concluded a 2-day “High-Level Policy Dialogue on Good Practices for Enhancing Public Debt Management in the Lao PDR”.
The high-level dialogue focused on identifying the interconnections between public debt management and fiscal, monetary, and financial policies to help develop a whole-of-government approach to strengthen public debt management. Drawing on international and regional experiences, government officials, private sector representatives, experts, and development partners from the region and beyond reviewed lessons and made proposals for the Government of the Lao PDR to consider in its plans to strengthen public debt management.
“The Ministry of Finance is grateful to the ADB for having co-hosted and helped organize this very timely high-level dialogue,” said Ministry of Finance Director General of Public Debt Management Soulivath Souvannachoumkham. “The experiences and lessons of other countries facing similar public debt challenges discussed during the dialogue will greatly help the government and the Ministry of Finance in particular to elaborate specific measures to enhance public debt management.”
The high-level dialogue has provided many useful proposals which would help the government revise the Public Debt Management Law and finalize its Medium-Term Debt Management Strategy, he said. The proposals made during the meeting will help ensure a more sustainable path for public debt, including in moving toward a better coordinated whole-of-government approach, he added.
Mr. Soulivath emphasized the need to ensure that the inevitable trade-offs between monetary, fiscal, and financial policies and public debt management are identified and resolved. He also stressed the need for more comprehensive, accurate, timely, and transparent monitoring of all public debts, guarantees, onlending arrangements, and contingent liabilities of state-owned enterprises and from public–private partnerships. A fiscal risk assessment is one of key important aspects to be considered to be included in the Public Debt Bulletin in the near future as part of its planned expansion in coverage, he added.
The government has already taken a series of corrective actions to reduce inflation and stabilize the exchange rate in response to the back-to-back external shocks from the COVID-19 pandemic and the rise in global inflation, which has stymied economic growth and adversely affected the public debt to gross domestic product ratio in the Lao PDR. The Ministry of Finance has also contributed to fiscal consolidation by increasing revenue collections and reducing expenditures.
“The high-level dialogue of the last 2 days has been engaging and substantive, and its outcomes provide the government with many of the key elements required for more effective public debt management” said ADB Deputy Director General for Southeast Asia Emma Veve. “The task for government going forward is to translate good practices identified into specific policies as soon as feasible, including by revising the Public Debt Management Law and elaborating a Medium-Term Debt Strategy.”
ADB will continue to support the Ministry of Finance and other ministries and public institutions to strengthen public debt management in the Lao PDR in close consultation with other development partners, including through ongoing technical assistance projects and the new country partnership strategy, 2024–2028, scheduled for ADB Board consideration early next year.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.