Abstract
Against the backdrop of generally sound policies and abundant natural resources, Lao P.D.R. has made impressive progress in developing its economy and reducing poverty. The key challenge going forward is to ensure that economic policy frameworks stay ahead of the curve to achieve sustainable and broad-based growth.
Annex I. Fund Relations
(As of July 31, 2012)
A. Membership Status
Joined: July 05, 1961; Article XIV
B. General Resources Account
| SDR Million | Percent of Quota | |
|---|---|---|
| Quota | 52.90 | 100.00 |
| Fund holdings of currency | 52.90 | 100.00 |
| Reserve position in Fund | 0.00 | 0.00 |
| SDR Million | Percent of Quota | |
|---|---|---|
| Quota | 52.90 | 100.00 |
| Fund holdings of currency | 52.90 | 100.00 |
| Reserve position in Fund | 0.00 | 0.00 |
C. SDR Department
| SDR Million | Percent Allocation | |
|---|---|---|
| Net cumulative allocation | 50.68 | 100.00 |
| Holdings | 51.07 | 100.78 |
| SDR Million | Percent Allocation | |
|---|---|---|
| Net cumulative allocation | 50.68 | 100.00 |
| Holdings | 51.07 | 100.78 |
D. Outstanding Purchases and Loans
| SDR Million | Percent of Quota | |
|---|---|---|
| ECF arrangements | 1.81 | 3.43 |
| SDR Million | Percent of Quota | |
|---|---|---|
| ECF arrangements | 1.81 | 3.43 |
E. Latest Financial Arrangements
In millions of SDRs (mm/dd/yyyy)
F. Projected Payments to Fund
In millions of SDRs (based on existing use of resources and present holdings of SDRs)
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| Principal | 0.91 | 0.91 | |||
| Charges/interest | 0.00 | 0.00 | 0.00 | 0.00 | |
| Total | 0.91 | 0.91 | 0.00 | 0.00 | 0.00 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| Principal | 0.91 | 0.91 | |||
| Charges/interest | 0.00 | 0.00 | 0.00 | 0.00 | |
| Total | 0.91 | 0.91 | 0.00 | 0.00 | 0.00 |
G. Exchange Arrangement
The exchange rate arrangement is classified as “stabilized.” The de jure arrangement is floating. The authorities” objective is to limit currency fluctuations vis-à-vis major currencies, including the U.S. dollar and Thai baht within ±5 percent per annum. The Bank of the Lao P.D.R. (BoL) sets a daily official reference rate, which is calculated as a weighted average of the previous day’s interbank rates. Commercial banks and foreign exchange bureaus are required to maintain their buying and selling rates within ±0.25 percent of the BoL’s daily reference rate for the U.S. dollar. For the euro and baht, the buying and selling rates may not exceed a margin of 0.5 percent. For other currencies, a margin of 2 percent applies.
On May 28, 2010, Lao P.D.R. accepted the obligations under Article VIII, Section 2, 3, and 4, following the elimination of one restriction subject to Fund jurisdiction under Article VIII arising from a requirement to obtain tax payment certificates for some transactions. Lao P.D.R. now maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions, except for restrictions imposed solely for the preservation of national or international security notified to the Fund pursuant to Decision No. 144-(52/51).
H. Article IV Consultations
The last Article IV consultation discussions were held in Vientiane during May 11–24, 2011 and were concluded by the Executive Board on July 8, 2011. The staff report (Country Report No. 11/257) was published on August 2011.
I. Technical Assistance
Over the past three years, Lao P.D.R. has received technical assistance in the areas of customs and tax revenue administration; price statistics; and the national accounts. A new IMF office that will facilitate technical assistance to Lao P.D.R. as well as Myanmar was announced in July 2012. The office will be based at the Bank of Thailand.
J. Resident Representative
Mr. Sanjay Kalra assumed the Senior Resident Representative post for Vietnam and Lao P.D.R., based in Hanoi, on October 16, 2011.
Annex II. IMF-World Bank Collaboration
The Bank and the IMF country teams for Lao P.D.R. met on July 3, 2012 to identify macro-critical structural reforms and to coordinate the two teams” work for FY13. The teams were led by Ms. Keiko Miwa (Country Manager, EASPR, World Bank), Mr. Sudhir Shetty (Director, EASPR, World Bank) and Mr. Dennis Botman (IMF Mission Chief for Lao P.D.R.).
The teams agreed that Lao P.D.R. had made impressive progress and that the key challenge going forward is to maintain macroeconomic and financial stability, achieve more diversified growth, and ensure that the country’s natural resource wealth is developed in a sustainable way that benefits the entire population.
Prudent fiscal and monetary policies and a strengthening of policy frameworks, including financial sector supervision and regulation, are essential to preserve banking sector soundness and replenish international reserves. Reforms to public financial management will need to be strengthened further—on both the tax and spending side—along with improvements in the enabling environment for private sector development to help ensure that Lao P.D.R.’s resource wealth is not the only source of economic progress and that economic development results in a generalized improvement in living standards and reduction in poverty.
Lao P.D.R.: Bank and Fund Planned Activities in Macro-Critical Structural Reform Areas, June 2012–May 2013
Lao P.D.R.: Bank and Fund Planned Activities in Macro-Critical Structural Reform Areas, June 2012–May 2013
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| 1. World Bank Program | New series of Poverty Reduction Support Operations (PRSOs) | Preparatory work and missions throughout fiscal year 2012–13 (identification mission tentatively scheduled in September 2011) | Board discussion expected in August 2012 and July 2013 |
| Customs and Trade Facilitation Project (CTFP) and Trade Development Facility (TDF) | Ongoing | Implementation throughout fiscal year TDF2 expected in December 2012 | |
| New IDA and Multi-Donor Trust-Fund Project supporting the Government Public Financial Management Strengthening Program (PFMSP) | Ongoing | New IDA approval expected in February 2013 | |
| Hydro-Mining Technical Assistance Project | Ongoing | Implementation throughout fiscal year 2013 | |
| Lao Statistical Capacity Building Project (LAOSTAT) | Ongoing | Approval expected in November 2012 | |
| Analytical work: macroeconomic monitoring (Lao economic monitors), investment climate, human resource development and skills reports | Ongoing | Reports available by May 2013 | |
| 2. IMF Work Program | Periodic staff visits by IMF resident representative based in Hanoi | July 2012 | July 2013. |
| Article IV Consultation | July 2012 | Board discussion including on the JSAN August 2012 | |
| Article IV Consultation | July 2013 | Board discussion on a Lapse of Time Basis | |
| TA on customs revenue administration and modernization | FY2012, peripatetic expert visit and/or an FAD mission | BTO/TA report in FY12 | |
| 3. Joint Work Program | External Debt Sustainability Analysis | July 2012 July 2013 |
July 2012 July 2013 |
Lao P.D.R.: Bank and Fund Planned Activities in Macro-Critical Structural Reform Areas, June 2012–May 2013
| Title | Products | Provisional Timing of Missions | Expected Delivery Date |
|---|---|---|---|
| 1. World Bank Program | New series of Poverty Reduction Support Operations (PRSOs) | Preparatory work and missions throughout fiscal year 2012–13 (identification mission tentatively scheduled in September 2011) | Board discussion expected in August 2012 and July 2013 |
| Customs and Trade Facilitation Project (CTFP) and Trade Development Facility (TDF) | Ongoing | Implementation throughout fiscal year TDF2 expected in December 2012 | |
| New IDA and Multi-Donor Trust-Fund Project supporting the Government Public Financial Management Strengthening Program (PFMSP) | Ongoing | New IDA approval expected in February 2013 | |
| Hydro-Mining Technical Assistance Project | Ongoing | Implementation throughout fiscal year 2013 | |
| Lao Statistical Capacity Building Project (LAOSTAT) | Ongoing | Approval expected in November 2012 | |
| Analytical work: macroeconomic monitoring (Lao economic monitors), investment climate, human resource development and skills reports | Ongoing | Reports available by May 2013 | |
| 2. IMF Work Program | Periodic staff visits by IMF resident representative based in Hanoi | July 2012 | July 2013. |
| Article IV Consultation | July 2012 | Board discussion including on the JSAN August 2012 | |
| Article IV Consultation | July 2013 | Board discussion on a Lapse of Time Basis | |
| TA on customs revenue administration and modernization | FY2012, peripatetic expert visit and/or an FAD mission | BTO/TA report in FY12 | |
| 3. Joint Work Program | External Debt Sustainability Analysis | July 2012 July 2013 |
July 2012 July 2013 |
Annex III. Relations with the Asian Development BANK
The Asian Development Bank’s (AsDB) current Country Partnership Strategy (CPS) 2012–2016 is aligned with the government’s development strategy (National Socio-Economic Development Plan (NSEDP, 7th Five-Year Plan)), and seeks to promote inclusive and sustainable economic growth and poverty reduction. The country assistance program evaluation, 2000–09, concluded that the AsDB’s assistance was successful, relevant, and effective. The CPS is designed to help the government diversify the economy in a sustainable and inclusive manner through agriculture and natural resources, education, energy, urban development, and public sector management. The CPS aims to maximize efficiency and sustainability through larger operations implemented over a longer period; maximize synergies with Greater Mekong Subregion program; and increase responsiveness to emerging issues in a rapidly changing economy. It highlights four thematic areas that will influence the design and focus of activities, including private sector development, governance, gender equity, and regional cooperation and integration. The CPS focuses on four core sectors: education, agriculture and natural resources, water supply and other municipal infrastructure and services, and energy. Strengthening public sector management is a crosscutting issue, key to efficient and effective development in Lao P.D.R. The performance-based allocation of the Asian Development Fund (ADF), based on the country performance assessment (CPA) finalized in 2010, provided Lao P.D.R. with an ADF allocation in the amount of US$152 million for the biennial period 2011–12. The CPA for the next allocation period (2013–2014) will be finalized by the end of 2012.
As of end-2011, cumulative loans/grants approved stood at US$631.48 million, out of which a cumulative amount of US$266.66 million was awarded for contracts. During 2011, US$73.2 million of grants were disbursed and US$53.2 million of contracts were awarded. Seven new technical assistance (TA) projects for a total of US$7.6 million were approved in 2011, including project preparation; TA projects related to transport and renewable energy; and capacity building TA to improve management and operational effectiveness.
Lao P.D.R.: Asian Development Bank Commitments and Disbursements, 2001–11 1/
(In millions of U.S. dollars)
Starting from 2006, the commitments and disbursements included both loans and grants.
The commitments and disbursements are as of December of each year
Lao P.D.R.: Asian Development Bank Commitments and Disbursements, 2001–11 1/
(In millions of U.S. dollars)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Commitments | 65.0 | 43.2 | 34.9 | 54.8 | 87.0 | 60.7 | 47.4 | 46.6 | 81.2 | 55.3 | 53.20 |
| Disbursements | 44.7 | 48.6 | 54.7 | 48.5 | 78.7 | 76.8 | 74.8 | 56.9 | 75.9 | 61.5 | 73.23 |
Starting from 2006, the commitments and disbursements included both loans and grants.
The commitments and disbursements are as of December of each year
Lao P.D.R.: Asian Development Bank Commitments and Disbursements, 2001–11 1/
(In millions of U.S. dollars)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Commitments | 65.0 | 43.2 | 34.9 | 54.8 | 87.0 | 60.7 | 47.4 | 46.6 | 81.2 | 55.3 | 53.20 |
| Disbursements | 44.7 | 48.6 | 54.7 | 48.5 | 78.7 | 76.8 | 74.8 | 56.9 | 75.9 | 61.5 | 73.23 |
Starting from 2006, the commitments and disbursements included both loans and grants.
The commitments and disbursements are as of December of each year
Annex IV. Statistical Issues
Assessment of Data Adequacy for Surveillance
General: Macroeconomic and financial data provided to the IMF have shortcomings that significantly hamper surveillance. Strengthening balance of payments (BOP) and national accounts statistics is a priority.
National accounts: National accounts comprise annual estimates of GDP by activity at current and constant base year 2002 prices, broadly following the System of National Accounts (SNA) 1993. Despite some improvements following the implementation of annual enterprise and household surveys, unresolved gaps and inappropriate data collection and compilation methodology continue to undermine the coverage and reliability of the GDP estimates. Lao P.D.R. participates in the IMF’s Statistics Department (STA) project to implement the SNA and International Comparison Project (ICP), funded by the government of Japan, and has received technical assistance (TA) to improve annual national accounts and develop quarterly national accounts (QNA). Following the TA mission of December 12–21, 2011 under this project, the authorities launched the updating of the base year of their national accounts from 2002 to 2007 and this is planned for release in late 2012. It is expected that the QNA and parts of the 2008 SNA will be released in October 2014.
Prices statistics: Lao P.D.R. compiles a monthly CPI (December 2010=100) using weights based on the 2007/08 Lao Expenditure and Consumption Survey. To date no PPI has been developed. A TA mission was held on June 4–15, 2012 to improve the CPI and begin developing a PPI. The authorities have begun to develop a new PPI for LAO. It is expected that the new PPI will be released in July 2013. The mission was funded through the authorities’ participation in the STA project to implement the SNA and ICP.
Government finance statistics: Government finance statistics remain weak. The timeliness of fiscal reporting needs significant improvement. Off-budget activities are not included in the fiscal data, although they have expanded rapidly. Annual budget and outturn data formats do not follow international standards. Except for the annual data disseminated in the Official Gazette, no fiscal data are disseminated in the country.
Monetary statistics: Regarding the compilation of monetary statistics, the classification of data by institutional sector and by financial instrument as well as valuation principles need to be strengthened. The Standardized Report Forms (SRFs), which embody the IMF-recommended framework for compiling monetary statistics need to be introduced. Financial soundness indicators should also be compiled and published. An STA mission to introduce the SRFs has been proposed, however, the authorities have not taken this up yet.
External sector statistics: The last TA mission was conducted in 2002. Lao P.D.R would be one of the beneficiaries of the recently approved Japan Administered Account (JSA) Project on the improvement of external sector statistics in the Asia and Pacific region. A TA mission on balance of payments statistics may take place in FY 2013.
Data Standards and Quality
Lao P.D.R. is not a General Data Dissemination System participant. No data ROSC is available.
Reporting to STA
Government finance statistics reporting for publication in the International Financial Statistics (IFS) and the Government Finance Statistics Yearbook, which was initiated in early 2009, is limited to budgetary central government and has been irregular and with long delays. Lao PDR reports quarterly and annual summary budget data in the GFSM 2001 format for publication in IFSand the GFSYearbook, with a time lag of six months or more, and on an irregular basis.
The reporting of monetary data is very irregular and also with long delays. Quarterly BOP data are reported once a year in a highly aggregated format. The last published data in the IFS and the Balance of Payments Statistics Yearbook correspond to 2010.
Table of Common Indicators Required for Surveillance
As of July 13, 2012
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency, but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency, but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign and domestic bank, nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Table of Common Indicators Required for Surveillance
As of July 13, 2012
| Date of Latest Observation |
Date Received |
Frequency of Data1 |
Frequency of Reporting1 |
Frequency of Publication1 |
|
|---|---|---|---|---|---|
| Exchange Rates | 06/29/12 | 06/29/12 | D | D | D |
| International Reserve Assets and Reserve Liabilities of the | Apr 2012 | 07/06/12 | M | I | Q |
| Monetary Authorities2 | |||||
| Reserve/Base Money | Apr 2012 | 07/06/12 | M | I | Q |
| Broad Money | Apr 2012 | 07/06/12 | M | I | Q |
| Central Bank Balance Sheet | Apr 2012 | 07/06/12 | M | I | Q |
| Consolidated Balance Sheet of the Banking System | Apr 2012 | 07/06/12 | M | I | Q |
| Interest Rates3 | Q4 2011 | 06/29/12 | M | M | Q |
| Consumer Price Index | Jun 2012 | 07/12/12 | M | M | M |
| Revenue, Expenditure, Balance and Composition of | Q2 FY12 | 06/14/12 | I | I | I |
| Financing4-General Government5 | |||||
| Revenue, Expenditure, Balance and Composition of | Q2 FY12 | 06/14/12 | Q | I | M |
| Financing4—Central Government | |||||
| Stocks of Central Government and Central Government-Guaranteed Debt6 | NA | NA | NA | ||
| External Current Account Balance | Q4 2011 | 07/12/12 | Q | I | I |
| Exports and Imports of Goods and Services | Q4 2011 | 07/12/12 | Q | I | I |
| GDP/GNP | 2010/11 | 06/29/12 | A | A | A |
| Gross External Debt | Dec 2011 | 06/29/12 | M | M | I |
| International Investment Position7 | NA | NA | NA |
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency, but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency, but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign and domestic bank, nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Table of Common Indicators Required for Surveillance
As of July 13, 2012
| Date of Latest Observation |
Date Received |
Frequency of Data1 |
Frequency of Reporting1 |
Frequency of Publication1 |
|
|---|---|---|---|---|---|
| Exchange Rates | 06/29/12 | 06/29/12 | D | D | D |
| International Reserve Assets and Reserve Liabilities of the | Apr 2012 | 07/06/12 | M | I | Q |
| Monetary Authorities2 | |||||
| Reserve/Base Money | Apr 2012 | 07/06/12 | M | I | Q |
| Broad Money | Apr 2012 | 07/06/12 | M | I | Q |
| Central Bank Balance Sheet | Apr 2012 | 07/06/12 | M | I | Q |
| Consolidated Balance Sheet of the Banking System | Apr 2012 | 07/06/12 | M | I | Q |
| Interest Rates3 | Q4 2011 | 06/29/12 | M | M | Q |
| Consumer Price Index | Jun 2012 | 07/12/12 | M | M | M |
| Revenue, Expenditure, Balance and Composition of | Q2 FY12 | 06/14/12 | I | I | I |
| Financing4-General Government5 | |||||
| Revenue, Expenditure, Balance and Composition of | Q2 FY12 | 06/14/12 | Q | I | M |
| Financing4—Central Government | |||||
| Stocks of Central Government and Central Government-Guaranteed Debt6 | NA | NA | NA | ||
| External Current Account Balance | Q4 2011 | 07/12/12 | Q | I | I |
| Exports and Imports of Goods and Services | Q4 2011 | 07/12/12 | Q | I | I |
| GDP/GNP | 2010/11 | 06/29/12 | A | A | A |
| Gross External Debt | Dec 2011 | 06/29/12 | M | M | I |
| International Investment Position7 | NA | NA | NA |
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
Any reserve assets that are pledged of otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency, but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency, but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign and domestic bank, nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Extended Credit Facility (ECF), formerly PRGF.