Govt asks NA to approve key economic figures

The government has asked the National Assembly to consider and approve some of the key macro-economic targets that were revised for 2022 amid fears of an economic shock.
The Governor of the Bank of the Lao PDR, Mr Sonexay Sitphaxay, presented a report at the ongoing National Assembly session, detailing the revised targets to be accomplished by the government by the end of this year.  
Under the proposal, the flexibility of the kip/US dollar exchange rate, which is currently allowed to fluctuate within a band of plus or minus 5 percent per year, will be amended to a level that does not create inflation pressures for the government.
Secondly, the average inflation rate is currently set at a maximum of 5 percent, but will be raised to 12 percent this year.
The government has also asked for the M2 amount to be raised from 22 percent to 28 percent in light of the continuing depreciation of the kip.
The changes come as the economy is being hit hard by global economic woes, triggered by the Russia-Ukraine conflict and the Covid-19 pandemic. Global uncertainty is hindering the government’s plans to achieve key targets as outlined in the socio-economic development plan for this year.
Assembly Vice President Mr Sommad Pholsena, on behalf of the NA Standing Committee, said members of parliament would debate the proposal by the government to revise development targets to reflect changing circumstances.
One of the main challenges for Laos is the fact that the inflation rate is higher than the rate of Gross Domestic Product (GDP) growth.
The government is aiming to achieve a projected GDP growth rate of 4.5 percent this year despite the uncertainties of domestic and external factors.
However, the year-on-year inflation rate in May climbed to its highest level in 18 years, with prices rising by 12.8 percent from a year ago, according to the latest report from the Lao Statistics Bureau.
The fuel crisis and fluctuating exchange rates are among the main factors driving inflation.
Over the past five months of this year, the inflation rate averaged 9 percent, which was well above the figure of 5 percent endorsed by the National Assembly.
High fuel prices on the global market, rising food prices, elevated inflation in Laos’ key trading partners and depreciation of the kip are all taking a toll on the Lao economy.
The fuel shortage remains a great concern, with many vehicles queuing up to fill their tanks, causing traffic congestion around the capital.
Mr Sommad also asked the government to examine State-funded investment projects to identify which projects should continue and which should be postponed. This is aimed at reducing the amount of debt created.

By Times Reporters
 (Latest Update June 15, 2022)