VIENTIANE, Nov. 1 (Xinhua) -- The Lao central bank, the Bank of the Lao PDR (BOL), will attempt to lower the rate of inflation to 9 percent or another single-digit figure by the end of 2024, by ensuring that the income earned from exports enters the banking system.
The ambitious target was cited by Governor of BOL Bounleua Sinxayvoravong when speaking at the sixth ordinary session of the National Assembly's ninth legislature on Tuesday, according to a report of the Lao People's Army Radio on Wednesday.
To achieve this goal, the bank will tighten the enforcement of monetary policy in order to create a larger money supply for circulation within the country, he said.
The bank will also continue to ensure that currency exchange rates are set in line with market mechanisms and make foreign currency exchange more flexible by improving the services provided by commercial banks, he added.
In addition, the central bank will improve the foreign trade market and make it easier for importers, exporters and investors to change foreign currencies and carry out transactions through the banking system.
The central bank wants 70 percent of export earnings to enter the Lao banking system.
The bank will also try to adjust foreign currency exchange rates for priority products that are essential for social and economic development and for people's everyday lives, as well as improve cross-border retail payments through the use of QR codes, which will facilitate foreign currency exchange and payments through the banking system.
Lao Prime Minister Sonexay Siphandone told assembly members that the ratio of foreign currency available compared to Lao currency kip in Laos increased from 31 percent in 2020 to 41.32 percent in the first nine months of 2023. It is expected that the figure will exceed 50 percent by the end of this year.
Fluctuations in foreign currency exchange rates are less severe and the inflation rate fell from 40 percent in the middle of 2022 to 25.69 percent in September 2023, the prime minister said.
However, the price of goods remains high, and exchange rates are vulnerable to changes in the global economy, he added.
The demand for foreign currencies in Laos is unable to match the volume of imports needed, while the high foreign debt is a continuing drain on the economy.
Sonexay called on every branch of government and the private sector, as well as members of the public, to play a part in resolving the country's economic issues by reducing the use of foreign currency wherever possible and expressing their patriotism by taking steps to support government policies. ■
