International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of the Lao People’s Democratic Republic is the Lao kip.
Other legal tenderThe Thai baht and the dollar are widely held and used for payments.
Exchange rate structure
DualThe exchange rate system comprises two rates: a rate set by the commercial banks and a parallel market rate.
Managed floating with no pre-announced path for the exchange rateCommercial banks and licensed foreign exchange bureaus are permitted to buy and sell foreign exchange at freely determined rates, provided the spread between buying and selling rates remains less than 2%. In practice, however, la Banque pour le commerce extérieur du Laos (BCEL), the major state-owned commercial bank and the dominant transactor in the official exchange market, sets the commercial bank exchange rate taking into account movements in the parallel market.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo prescription of currency requirements are imposed on receipts or payments but, in principle, the Bank of the Lao P.D.R. (BOL), the central bank, provides and accepts only dollars, euros, Japanese yen, pounds sterling, Swiss francs, and Thai baht.
Payment arrangements
Bilateral payment arrangements
OperativeA bilateral payment agreement is in effect with Vietnam.
InoperativeAn inoperative bilateral payment agreement exists with Malaysia.
Barter agreements and open accountsBilateral trading arrangements are maintained with China and Vietnam.
Administration of controlOfficial transactions are handled by the BOL. The Ministry of Commerce (MOC) grants import and export authorization to state trading companies, joint ventures between domestic enterprises and foreign investors, cooperatives, and other public and private enterprises.
International security restrictionsn.a.
Payment arrearsn.a.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeImports and exports of gold and silver require BOL authorization.
Controls on exports and imports of banknotes
On exports
Domestic currencyExports of domestic currency require BOL authorization.
Foreign currencyResidents traveling abroad may take out foreign currency within the limit set from time to time by the BOL.

Nonresidents are authorized to take out foreign currency to the limit of the amount that was brought in and declared upon arrival.
On imports
Domestic currencyImports of domestic currency require BOL authorization.
Foreign currencyPersons entering the country may bring unlimited amounts of foreign currency and may declare the amount thereof to the immigration officer at the port of entry in case they want to take out the same amount in foreign exchange.
Resident Accounts
Foreign exchange accounts permittedForeign exchange accounts may be credited with (1) proceeds from exports of goods and services; (2) other transfers from abroad; (3) transfers or payments from foreign currency accounts opened with commercial banks within Lao P.D.R.; and (4) foreign banknotes and coins. These accounts, which are interest bearing, may be debited for conversion into kip for domestic expenditure, or foreign exchange balances may be used for authorized external payments and transfers.
Held domesticallyYes.
Held abroadResidents may open accounts abroad in exceptional cases with the approval of the BOL.
Accounts in domestic currency convertible into foreign currencyKip accounts of nonresidents, namely embassies and international organizations, the credit balance of which is from conversion of foreign currency, are considered as convertible accounts.
Nonresident Accounts
Foreign exchange accounts permittedThese accounts may be credited with (1) remittances from abroad; (2) transfers from other nonresident and resident foreign currency accounts in Lao P.D.R.; and (3) foreign currency brought into the country by the account holder and duly declared upon arrival. Nonresidents are not allowed to accept or deposit to their accounts foreign currency proceeds from exports of goods and services of residents without the approval of the BOL. These accounts, which bear interest, may be debited for (1) conversion into kip; (2) transfers into residents’ and nonresidents’ foreign currency accounts maintained with an authorized commercial bank; (3) payments in kip to accounts of residents or nonresidents; and (4) payments and transfers abroad.
Domestic currency accountsThese accounts may be credited with (1) sales of foreign currencies and (2) transfers from other convertible kip accounts of holders of the same category. Nonresidents are not permitted to deposit kip belonging to residents into their convertible kip accounts. These accounts may be debited for (1) payments in kip and (2) conversion into foreign currency at the prevailing buying rate of the commercial bank concerned.
Convertible into foreign currencyYes.
Blocked accountsn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance import depositsMargin deposits are required against LCs, and the rates are set by the BCEL and other commercial banks.
Documentation requirements for release of foreign exchange for imports
Preshipment inspectionA joint-venture company inspects goods before shipment.
Letters of creditYes.
Import licenses and other nontariff measuresImport licenses issued by the trade department under the Vientiene prefecture and provincial government authorities are required for all goods. Imports may be made by any registered export-import business.
Negative listYes.
Licenses with quotasThe quota for the imports of vehicles has been abolished.
Other nontariff measuresYes.
Import taxes and/or tariffsThe tariff structure is composed of six rates (5%, 10%, 15%, 20%, 30%, and 40%). The lowest rates apply to imports of raw materials, certain inputs, and certain essential consumer goods. The highest rates of 30% and 40% apply to luxury consumer goods, certain beverages, and tobacco.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsYes.
Financing requirementsn.a.
Documentation requirementsn.a.
Export licensesExport licenses, which are issued by the trade department under the Vientiene prefecture and provincial government authorities, are required for all products.
With quotasQuotas apply only to timber.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Investment-related paymentsInformation is not available on the payment of amortization of loans or depreciation of direct investments.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsProceeds from invisibles are, in practice, treated in the same way as proceeds from merchandise exports.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsAll capital transactions require BOL authorization.
Controls on derivatives and other instrumentsAll derivatives transactions require BOL authorization.
Controls on credit operationsn.a.
Controls on direct investmentDirect investments are subject to the Direct Investment Promotion and Management Law.
Outward direct investmentYes.
Inward direct investmentYes.
Controls on liquidation of direct investmentThese transactions are permitted after BOL scrutiny. Transfers of large sums may be made in installments according to a plan approved by the BOL.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital movementsn.a.
Provisions specific to commercial banks and other credit institutions
Maintenance of accounts abroadAuthorized commercial banks may open accounts abroad.
Differential treatment of deposit accounts in foreign exchange
Interest rate controlsYes.
Open foreign exchange position limitsYes.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 1999
No significant changes occurred in the exchange and trade system.

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