2011年-世界发展银行全球_Lao_PDR_Public_Expenditure_Review_111页_1mb

Public Expenditure Review of Lao PDR (2011)

Executive Summary

This Public Expenditure Review (PER) of Lao PDR analyzes the country's macro-fiscal performance, the implementation of the Nam Theun 2 (NT2) Revenue Management Arrangements (RMA), and the progress of public financial management (PFM) systems. The report also examines intergovernmental fiscal arrangements, focusing on revenue and expenditure assignments, transfers, and the challenges in achieving a more balanced and transparent system.

The review highlights the following key points:

• Macroeconomic Performance: Lao PDR experienced strong economic growth (7.7% from 2005-2010), driven by both resource and non-resource sectors. Despite the global financial crisis, the economy performed relatively well, with GDP growth reaching 8.4% in 2010.
• Poverty Reduction: Poverty headcount decreased from 33% in 2002/03 to 27% in 2007/08.
• Revenue Trends: Revenue collection improved significantly, especially in non-resource taxes, but remains low at 13.3% of GDP in 2010. The government has made progress in centralizing tax, customs, and treasury functions, which has improved cash management and reduced arrears.
• Debt Management: Public debt as a percentage of GDP has declined from 112% in 2001 to 55% in 2009, aided by currency appreciation. However, the country still faces high risk of external debt distress.
• NT2 RMA Implementation: The NT2 project has provided significant revenue potential ($1.9 billion over its lifetime), but challenges remain in developing performance indicators and ensuring that spending is additional and aligned with poverty reduction and environmental goals.
• PFM System Strengthening: There has been progress in modernizing the PFM system, including the introduction of a new budget nomenclature, a centralized treasury system, and an independent audit framework. However, the system remains fragmented, with many statutory funds and "technical" revenues not fully integrated.
• Expenditure Prioritization: The PFM system lacks a clear fiscal framework, leading to weak prioritization of expenditure. The National Socio-Economic Development Plan (NSEDP) is not costed or fiscally constrained, and the recurrent budget is heavily weighted toward administrative spending.
• Intergovernmental Fiscal Arrangements: The government is moving towards a more transparent and rule-based fiscal system. However, the current system is still fragmented, with unclear responsibilities and revenue assignments. The introduction of expenditure norms and a more systematic approach to fiscal transfers is recommended.

Core Content

Chapter 1: Macro-Fiscal Performance

• Economic Growth: Lao PDR has seen sustained growth of around 7.7% since 2005, driven by both resource and non-resource sectors.
• Poverty Reduction: Continued progress in poverty reduction, with headcount falling from 33% to 27%.
• Current Account Deficit: Reduced from 13.6% of GDP in 2009 to 9.3% in 2010, supported by increased exports and capital inflows.
• Revenue Trends: Revenue to GDP ratio remains low at 13.3%, with non-resource tax revenues recovering since 2005.
• Fiscal Deficit: Reduced to 4.6% of GDP in 2009/10, but widened in 2008/09 due to global crisis and increased public investment.
• Debt Management: Public debt as a share of GDP has decreased from 112% in 2001 to 55% in 2009, but external debt remains a risk.
• Arrears and Contingent Liabilities: Government arrears have been largely addressed, and SOEs and SOCBs have undergone some reforms.

Chapter 2: Nam Theun 2 Revenue Management Arrangements

• NT2 Revenue Potential: Estimated at $1.9 billion over the project’s lifetime, derived from royalties, company tax, and dividends.
• RMA Objectives: To improve the effectiveness of public spending and ensure that NT2 funds are used for pro-poor and environmental projects.
• PFM System Improvements: Progress has been made in modernizing the PFM system, including centralization of revenue collection, improved budget planning, and the introduction of a new budget nomenclature.
• Challenges: Limited progress in developing performance indicators, and difficulty in determining baseline spending due to data lags and classification issues.
• Recommendations: Focus on developing performance monitoring indicators and ensuring that revenue allocations are tied to eligible programs.

Chapter 3: Public Financial Management

• Expenditure Prioritization: Weak in the PFM system, with a lack of fiscal framework and budget fragmentation.
• NSEDP and Budget Alignment: The NSEDP is not costed or fiscally constrained, and its link to the budget is weak.
• Need for MTEF and MTFF: A Medium Term Expenditure Framework (MTEF) and Medium Term Fiscal Framework (MTFF) are essential for guiding budget planning and ensuring fiscal discipline.
• Budget Coverage and Classification: The budget system needs to be expanded to include all technical and overseas development assistance revenues. A consistent functional classification across the general government is recommended.
• Coordination and Oversight: Better coordination between central and local budget departments, and between sector ministries and the Ministry of Finance, is needed. The National Assembly and State Audit Office should play a stronger role in oversight and accountability.

Chapter 4: Intergovernmental Fiscal Arrangements

• Centralization of Revenue Collection: The government has centralized tax, customs, and treasury functions, improving cash management and reducing arrears.
• Expenditure Norms: Introduced for health and education, and should be extended to other sectors.
• Revenue Sharing: Revenue sharing categories are specified in the State Budget Law, but relative shares need to be determined.
• Equalization Grants: A system based on expenditure needs and revenue capacity is being designed for worse-off provinces.
• Tax Autonomy: Granting some tax autonomy at the provincial level is recommended for the medium term.
• Conditional Grants: Introduction of conditional grants for recurrent purposes is also recommended.

Main Recommendations

• Budget Planning and Classification:

  • Expand budget coverage to include all overseas development assistance and technical revenues.
  • Issue indicative budget ceilings to ministries and agencies.
  • Integrate recurrent, investment, and personnel budgeting.
  • Follow the budget calendar as stipulated in the Budget Law.
  • Improve coordination between central and local budget departments and sector ministries.
  • Implement a full GFS consistent functional classification across the general government.
  • Develop a medium-term fiscal framework to guide budget preparation.

• Budget Execution:

  • Complete implementation of the consolidated single account within the National Treasury.
  • Ensure technical revenue accounts are captured within the fiscal reporting system.
  • Enter all transactions ex-ante into the budget execution and reporting system.
  • Phase out ex-post transaction entries.
  • Monitor and settle arrears on utilities, especially electricity.

• Fiscal Reporting:

  • Report the structure of the budget using standard GFS classifications.
  • Prepare budget execution reports with variance analysis for major expenditure categories.
  • Expand fiscal reports to include ODA and technical revenues across the country.

Key Information

• Currency Equivalents: 8,000 kip = US$1, US$ = SDR 1.
• Fiscal Year: October 1 – September 30.
• Important Acronyms and Terms:
  • NT2: Nam Theun 2 Project.
  • RMA: Revenue Management Arrangements.
  • PFM: Public Finance Management.
  • MTEF: Medium Term Expenditure Framework.
  • MTFF: Medium Term Fiscal Framework.
  • TSA: Treasury Single Account.
  • GFS: Government Finance Statistics.
  • GOL: Government of Lao PDR.
  • BOL: Bank of Lao PDR.
  • SOE: State Owned Enterprise.
  • SOCB: State Owned Commercial Bank.
  • DSA: Debt Sustainability Analyses.
  • NPL: Non-Performing Loan.
  • NGPES: National Growth for Poverty Eradication Strategy.
  • NSEDP: National Social Economic Development Plan.

Conclusion

The PER highlights that while Lao PDR has made significant strides in strengthening its PFM system and implementing the NT2 RMA, several challenges remain, particularly in the areas of expenditure prioritization, budget integration, and fiscal transparency. Continued reform and coordination between central and local governments, along with the development of performance indicators and fiscal frameworks, are essential to ensure that public resources are effectively used to achieve poverty reduction and sustainable development goals.