世界银行-《老挝人民民主共和国经济监测》，2023年11月：稳定财政政策-主题部分：改善收入调动（英）-2023.11-51页_1mb

Lao PDR Economic Monitor Summary (November 2023)

Overview

This report analyzes the economic developments in Lao PDR for November 2023, highlighting challenges in macroeconomic stability, fiscal management, and revenue mobilization. Key focuses include inflation, debt sustainability, and policy recommendations for improvement.

Recent Economic Developments

• Growth and Instability: GDP growth is projected at 3.7% for 2023, supported by the recovery in the services sector, tourism, and foreign investment. However, growth is hampered by labor shortages, merchandise export weaknesses, and high inflation.
• Inflation: Consumer price inflation reached 26% year-to-November 2023, driven by Lao kip depreciation and supply-side pressures. A 1% kip depreciation increases inflation by an average of 0.5%, exacerbating living costs and poverty.
• Fiscal Performance: Fiscal consolidation occurred through expenditure tightening and improved domestic revenue collection, leading to a primary surplus in 2023. However, high debt service obligations and limited fiscal space constrain investments in social services.
• External Sector: The kip depreciated significantly against major currencies, worsening external imbalances and fueling inflation. External debt service remains high, with delays from China providing temporary relief.

Key Challenges

• High Inflation and Debt Burden: Persistent depreciation of the Lao kip fuels double-digit inflation, while public debt-to-GDP ratios reached 112% in 2022, up to 125% if arrears and currency swaps are included. This limits fiscal space and investment.
• Revenue Shortfall: Total revenue collection is low, with the tax-to-GDP ratio at 15%, significantly below regional peers. Corporate income tax and value-added tax collections are weak due to rate cuts and incentives.
• Structural Issues: Labor shortages from migration, slow progress on reforms, and vulnerabilities in the financial sector (e.g., higher non-performing loans) pose risks to long-term growth.

Policy Recommendations

• Revenue Mobilization: Restore the VAT rate to 10% to boost revenue, streamline tax exemptions, and strengthen tax administration.
• Tax Reforms: Phase out profit-based incentives and shift to cost-based measures (e.g., accelerated depreciation). Increase excise taxes on tobacco, fuel, and alcohol for revenue gains and social benefits.
• Debt Management: Expedite debt renegotiations to restore sustainability, as current levels threaten fiscal stability and growth.
• Monetary and Fiscal Policy: Tighten monetary policy to curb inflation, reprioritize spending toward education and health, and enhance financial supervision to prevent systemic risks.
• Broader Actions: Improve data quality for evidence-based policy and address bottlenecks in foreign exchange liquidity.

Conclusion

Restoring macroeconomic stability requires comprehensive reforms in revenue mobilization, public debt management, and expenditure prioritization. Without bold actions, Laos faces continued economic instability and reduced growth prospects.