IMF lauds Laos economy, but urges ‘caution’

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Laos hammer and sickleThe International Monetary Fund (IMF) has praised Laos for its impressive economic growth but urges steps be taken to address growing economic vulnerabilities, according to an IMF press release issued on November 28.

According to the IMF Executive Board Assessment, medium-term economic prospects in Laos remain “broadly favourable” due to robust natural resource exports and post-WTO expansion in non-resource sectors. The assessment recommends a tightening of financial and monetary policies as well as a buildup of fiscal buffers and replenishment of international reserves to safeguard the Lao economy against the possible negative effects of its expansionist macroeconomic policy.

The IMF has predicted real GDP growth in Laos as 8.25 per cent for 2013 spurred on by investment and private consumption. The Lao government has targeted at least 8 per cent annual GDP growth for the period 2011-2015 in order to catalyse economic development and graduate from UN least developed country status by 2020. According to the IMF report, consumer price inflation is projected to rise to 7.5 per cent by the end of 2013.

The IMF stressed that fiscal consolidation is central to ensuring macroeconomic stability. More ambitious fiscal tightening, anchored by a nonmining fiscal deficit of no more than 5 per cent of GDP would help ensure the fiscal space necessary for capital and human development spending. Continued improvements in tax collection would be an important component in fiscal consolidation efforts. The fund  welcomed the Lao government’s intent to restrain the increase in public sector compensation for 2014 and recommended that future increases be implemented at a more measured pace.

The IMF assessment congratulated Laos for its recent WTO accession which should facilitate greater economic diversification. Further efforts to enhance the business climate, upgrade economic and financial statistics and improve health and education infrastructure will continue to contribute to a more inclusive and broader-based growth to support the country’s goal of attaining middle-income status by 2020.

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Reading Time: 2 minutes

The International Monetary Fund (IMF) has praised Laos for its impressive economic growth but urges steps be taken to address growing economic vulnerabilities, according to an IMF press release issued on November 28.

Reading Time: 2 minutes

Laos hammer and sickleThe International Monetary Fund (IMF) has praised Laos for its impressive economic growth but urges steps be taken to address growing economic vulnerabilities, according to an IMF press release issued on November 28.

According to the IMF Executive Board Assessment, medium-term economic prospects in Laos remain “broadly favourable” due to robust natural resource exports and post-WTO expansion in non-resource sectors. The assessment recommends a tightening of financial and monetary policies as well as a buildup of fiscal buffers and replenishment of international reserves to safeguard the Lao economy against the possible negative effects of its expansionist macroeconomic policy.

The IMF has predicted real GDP growth in Laos as 8.25 per cent for 2013 spurred on by investment and private consumption. The Lao government has targeted at least 8 per cent annual GDP growth for the period 2011-2015 in order to catalyse economic development and graduate from UN least developed country status by 2020. According to the IMF report, consumer price inflation is projected to rise to 7.5 per cent by the end of 2013.

The IMF stressed that fiscal consolidation is central to ensuring macroeconomic stability. More ambitious fiscal tightening, anchored by a nonmining fiscal deficit of no more than 5 per cent of GDP would help ensure the fiscal space necessary for capital and human development spending. Continued improvements in tax collection would be an important component in fiscal consolidation efforts. The fund  welcomed the Lao government’s intent to restrain the increase in public sector compensation for 2014 and recommended that future increases be implemented at a more measured pace.

The IMF assessment congratulated Laos for its recent WTO accession which should facilitate greater economic diversification. Further efforts to enhance the business climate, upgrade economic and financial statistics and improve health and education infrastructure will continue to contribute to a more inclusive and broader-based growth to support the country’s goal of attaining middle-income status by 2020.

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