2017年-世界发展银行全球_Lao_Economic_Monitor_April_2017___Challenges_in_Promoting_More_Inclusive_Growth_and_Shared_Prosperity_58页_3mb

Summary of Lao Economic Monitor (April 2017)

Core Content

The Lao Economic Monitor provides an overview of recent economic developments and challenges in promoting more inclusive growth and shared prosperity in Lao PDR. It includes a thematic section on health sector financing, highlighting the need for increased government investment and improved financial systems to support the country's development goals.

Main Economic Developments

Growth

• GDP Growth: Lao PDR's GDP growth was estimated at 7% in 2016, a slight moderation from 7.4% in 2015.
• Sectoral Contributions: The power sector and services were the main contributors to growth. The power sector's installed capacity increased by over 20% to above 6,000 MW, driven by private (mostly foreign) investments.
• Agriculture: Output recovered after a drought in 2015. There is evidence of diversification from subsistence rice production to commercial cash crops like coffee, banana, rubber, and beans.
• Manufacturing: Continued to expand, albeit from a low base and mainly confined to Special Economic Zones (SEZ).
• Construction: Remained resilient, supported by ongoing power projects and real estate development.
• Mining: Output remained flat due to mature operations and lack of new projects.

Inflation

• Overall Inflation: Averaged 1.8% in 2016, up from 1.3% in 2015.
• Food Inflation: Averaged 4.5%, slightly lower than the previous year.
• Core Inflation: Remained at 1.1%, indicating subdued inflationary pressures.

Fiscal Development

• Fiscal Deficit: Increased significantly in FY15/16 to 6.2% of GDP, up from below 4% in the previous two fiscal years.
• Revenue Decline: Revenue as a share of GDP fell to 19% in FY15/16 from 23% in FY14/15 due to lower commodity and oil prices, and reduced economic activity.
• Public Expenditure: The expenditure to GDP ratio declined to 25% in FY15/16 from 27% in FY14/15.
• Debt Management: The fiscal deficit was increasingly financed by bilateral and less concessional sources. The 2016 Debt Sustainability Analysis (DSA) moved Lao PDR to a high risk of debt distress.
• Public Sector Arrears: The Government allocated 30% of annual capital spending to clear arrears.

External Sector

• Current Account Deficit: Improved in 2016 due to higher electricity and manufacturing exports and lower fuel imports.
• Foreign Reserves: Reached almost US$940 million in September 2016, but coverage remained low, covering less than 2 months of imports.
• Exchange Rate: The official kip/US dollar exchange rate depreciated, but the nominal effective exchange rate stabilized. The real effective exchange rate appreciated by about 30% over the last five years.
• Monetary Policy: The Bank of Lao PDR (BOL) reduced the policy rate and interest rate caps, leading to a pick-up in credit growth to 21% YoY in September 2016.

Monetary Developments

• Credit Growth: Increased to 21% YoY in September 2016, but remained below previous unsustainable levels.
• Banking Sector: While the number of banks and their assets increased, some banks still face inadequate capital and weak loan portfolios. Only about a quarter of banks have ROA above 2%.
• Bilateral and Commercial Borrowing: The Government increasingly resorted to bilateral and commercial borrowing, raising public debt to 68% of GDP in 2016.

Outlook

• GDP Growth: Projected to remain around 7% in 2017 and 2018, supported by the power sector and non-resource economic activities.
• Power Exports: Expected to continue growing, with around 600 MW of new capacity coming online over the next two years.
• Fiscal Deficit: Projected to stabilize in 2017 due to efforts to improve non-resource taxation and public finance management.
• Railway Project: The Lao-China railway project may increase domestic demand but also widen fiscal and external balances.
• Fiscal Consolidation: Needed to ensure the sustainability of public debt and improve efficiency in public spending.

Health Sector Financing

Health Financing Situation

• Total Health Expenditure: Remains low, with government spending accounting for a small share.
• Out-of-Pocket (OOP) Spending: Accounts for up to 39% of total health spending in 2014, deterring poor households from utilizing health services.
• Public Health Spending: As a share of national budget was 4.6% in 2014, indicating a heavy reliance on external assistance.
• Health Outcomes: Still lag behind regional averages, particularly in maternal and child health.

Challenges and Policy Recommendations

• Low Government Spending: Needs to be increased, especially from domestic revenue sources, to reduce OOP spending and enhance the redistributive capacity of the health system.
• Reliance on External Finance: Declining share of external assistance puts pressure on public finances and highlights the need for more domestic funding.
• Improving Efficiency: Required to enhance service delivery and reduce fiscal vulnerability.
• Universal Health Coverage (UHC): A key goal by 2025, which necessitates significant improvements in health financing mechanisms.

Key Policy Recommendations

• Broaden Tax Base: Increase tax rates and introduce new revenue sources.
• Strengthen Tax Administration: Improve taxpayer registries, e-filling, and tax audits.
• Enhance Public Spending Efficiency: Prevent off-budget projects and improve resource allocation.
• Strengthen Debt Management: Implement a revised Budget Law and a Public Debt Law to improve reporting and management.
• Reduce Vulnerability: Increase awareness of non-concessional borrowing risks and prioritize high-return projects.
• Develop Financial System: Improve risk pricing and strengthen creditor rights to support inclusive growth.
• Invest in Health Services: Increase government spending on health services to support UHC and improve health outcomes.
• Enhance Human Resources for Health (HRH): Address skills shortages to support business growth and economic diversification.
• Improve Exchange Rate Flexibility: Allow greater flexibility within the exchange rate band and consider exchange rate developments in key trading partners to reduce pressure on reserves and the real appreciation of the kip.

Risks

• External Risks: Increased uncertainty due to potential triggers such as US economic policies, UK exit from the EU, and China's economic rebalancing.
• Commodity Price Volatility: Declines in copper, gold, coffee, and rubber prices could negatively impact mining and agriculture output.
• Exchange Rate Pressures: Continued pressure on the kip could lead to inflation and test the stability of the financial sector.
• Fiscal Sustainability: Risk of fiscal instability if debt management functions are not upgraded promptly.
• Weak Financial Sector: Could trigger larger risks to stability and create a significant fiscal burden.
• Informal Business Practices: High levels of informal practices and corruption could affect investment and market competition.

Conclusion

The Lao economy has experienced robust growth over the past decade, but recent developments suggest a need for more inclusive and sustainable growth. The health sector remains underfunded, with high levels of OOP spending and reliance on external assistance. The fiscal position has deteriorated, and the risk of debt distress has increased. Strengthening the financial system, improving tax administration, and increasing government investment in health services are essential for achieving the country's development goals and ensuring long-term economic stability.