VIENTIANE, Oct. 5 (Xinhua) -- Laos' Ministry of Finance, in partnership with the Asian Development Bank (ADB) held a high-level policy dialogue on good practices for enhancing public debt management in the Southeast Asian country, from Wednesday to Thursday in Lao capital Vientiane.
The two-day event is planned to discuss the interconnections between public debt and fiscal, monetary, and financial policies, with the view of helping develop a whole-of-government approach to strengthen public debt management, Lao News Agency (KPL) reported on Thursday.
Over 100 participants from the Lao government, central bank, the private sector, research organizations, and development partners from across the region and beyond will share experiences and lessons on public financial management and debt sustainability.
"The high-level dialogue is very timely. Public debt in Laos has attracted the attention of many observers and stakeholders inside and outside the country, because it is a core issue in the financing of the country's current and future socio-economic development," said Lao Minister of Finance Santiphab Phomvihane during his keynote address.
He said the high level of total public and publicly guaranteed (PPG) debt in Laos, which reached 112 percent of gross domestic product (GDP) in 2022, had been made worse by the back-to-back shocks of the COVID-19 pandemic and rising global inflation.
He added that the government has taken steps to reduce inflation and stabilize the exchange rate to help restore macroeconomic stability and sought ways to reduce the stock of outstanding PPG debt and exert tighter control on the new public sector borrowing.
He hoped that through discussions on the experiences of other countries faced with similar challenges, the high-level dialogue will help identify good practices which would be applicable to enhance public debt management in Laos.
"The government recognizes that the high level of public debt is an urgent concern that needs to be addressed. The Lao government has taken some important measures with a view to restore macroeconomic stability, but additional actions are necessary," said ADB Director General and Sectors Group Chief, Ramesh Subramaniam.
While economic growth in Southeast Asia is expected to remain solid, risks to the outlook are rising. High interest rates have heightened the risk of financial instability, and supply disruptions from geopolitical tensions continue, making it challenging to rebuild the fiscal space necessary to cope with any major shocks. Financing needs and debt ratios in many countries are likely to remain high for a long period.
Total external public debt accounted for three quarters of total PPG debt in Laos in 2022, and it poses a special challenge because of the sharp depreciation of the Lao currency kip against foreign currencies, according to the report. ■
