Abstract
2019 Article IV Consultation-Press Release; Staff Report; Statement by the Executive Director for Lao People's Democratic Republic
Fund Relations
(As of May 31, 2019)
Membership Status: Joined on July 5, 1961.
General Resources Account:
| SDR Million | Percent Quota | |
|---|---|---|
| Quota | 105.80 | 100.0 |
| Fund holdings of currency (Exchange Rate) | 92.58 | 87.50 |
| Reserve Tranche Position | 13.23 | 12.50 |
| SDR Million | Percent Quota | |
|---|---|---|
| Quota | 105.80 | 100.0 |
| Fund holdings of currency (Exchange Rate) | 92.58 | 87.50 |
| Reserve Tranche Position | 13.23 | 12.50 |
SDR Department:
| SDR Million | % Allocation | |
|---|---|---|
| Net cumulative allocation | 50.68 | 100.00 |
| Holdings | 37.79 | 74.65 |
| SDR Million | % Allocation | |
|---|---|---|
| Net cumulative allocation | 50.68 | 100.00 |
| Holdings | 37.79 | 74.65 |
Outstanding Purchases and Loans: None
Latest Financial Arrangements:
Projected Payments to the Fund2
(SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Principal | |||||
| Charges/Interest | 0.07 | 0.14 | 0.14 | 0.14 | 0.14 |
| Total | 0.07 | 0.14 | 0.14 | 0.14 | 0.14 |
| Forthcoming | |||||
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Principal | |||||
| Charges/Interest | 0.07 | 0.14 | 0.14 | 0.14 | 0.14 |
| Total | 0.07 | 0.14 | 0.14 | 0.14 | 0.14 |
Exchange Rate Arrangement
The de jure arrangement is a managed float. Since September 2016, the kip has followed a depreciating trend against the U.S. dollar. Therefore, the de facto exchange rate arrangement was reclassified to a crawl-like arrangement from a stabilized arrangement, effective September 2, 2016. The authorities’ objective is to limit currency fluctuations of LAK against USD within ±5 percent per annum. The Bank of the Lao P.D.R. (BOL) sets a daily official reference rate for LAK to USD which is calculated based on the weighted average of the previous day’s overall rate, the estimation of the domestic demand for USD and the forecasting of USD rate in the international market. Commercial banks and foreign exchange bureaus are required to maintain their buying and selling rates within ±0.25 percent of the daily reference rate. For the Euro and Baht, the buying and selling rate may not exceed a margin of 0.5 percent and 0.75 percent, respectively. For other currencies, a margin of 2 percent applies.
Lao P.D.R. has accepted the obligations under Article VIII, Sections 2(a), 3 and 4 and maintains an exchange system free of restrictions on the making of payments and transfers on current international transactions, except for restrictions imposed solely for security reasons and notified to the Fund under the Decision No. 144-(52/51).
Article IV Consultation
The last Article IV consultation discussions were held in Vientiane during November 29–December 13, 2017and were concluded by the Executive Board on February 26, 2018. The staff report (Country Report No. 18/84) was published March 2018.
Technical Assistance
Over the past five years, Lao P.D.R. has received technical assistance in the areas of: banking supervision and interbank market development; monetary operations; customs administration; tax and natural resource revenue administration; tax policy; public financial management; macroeconomic management; price statistics; external sector statistics; government finance statistics; and the national accounts. A Bangkok-based IMF office, Capacity Development Office in Thailand (CDOT) has facilitated technical assistance to Lao P.D.R. (as well as Cambodia, Myanmar, and Vietnam) and has provided technical assistance in macroeconomic analysis and forecasting, monetary operations, government finance statistics, external sector statistics, and public financial management.
Resident Representative
Francois Painchaud assumed the Resident Representative post for Vietnam and Lao P.D.R., based in Hanoi, on June 3, 2019.
Information on the Activities of Other IFIS
Information on the activities of other IFIs in Lao P.D.R. can be found at:
World Bank: https://www.worldbank.org/en/country/lao
Asian Development Bank: https://www.adb.org/countries/lao-P.D.R./main
Statistical Issues
(As of June 30, 2019)
| I. Assessment of Data Adequacy for Surveillance |
| General: Data provision has serious shortcomings that significantly hamper surveillance, especially regarding national accounts, government finance, financial sector, and external sector statistics. These shortcomings are mostly due to lack of capacity which could be addressed through further efforts on the part of the authorities involved. The IMF is conducting technical assistance (TA) and training programs to address the specific needs with a focus to mitigate near-term risks, covering the areas of national accounts, prices, government finance statistics, monetary and financial statistics, and external sector statistics. |
| National Accounts: National accounts (NA) comprise annual estimates of GDP by activity at current and constant prices. Rebased national accounts (base year=2012) were released in early 2017 with the help of a World Bank expert, broadly following the System of National Accounts (SNA) 1993 (includes part of 2008 SNA). Lao P.D.R. participated in the IMF’s Statistics Department (STA) project to implement the SNA and International Comparison Project (ICP), funded by the government of Japan through the Japan Administered Account for Selected Activities (JSA), and has received technical assistance (TA) to improve annual national accounts and develop quarterly national accounts (QNA). Under this project, Lao P.D.R. made some methodology improvements in the annual GDP by activity estimates, and has moved closer to completing a new annual expenditure measure of GDP and a preliminary GNI series. However, there are some weaknesses in data sources, particularly on intermediate consumption of businesses. Some progress had also been made toward the development of a new quarterly GDP series, together with GDP by expenditure. |
| Price Statistics: The monthly consumer price index (CPI) for Lao P.D.R. was updated during 2016. Coverage was extended from 12 to all 18 provinces, the number of basket items increased from 245 to 485, and expenditure weights were updated using the results of the 2012 Lao Social Indicator Survey (LSIS). However, the full list of the updated weights has not yet been disclosed. To ensure that the index remains representative of current expenditure patterns, the Lao Statistics Bureau should prioritize the update of the expenditure weights using the results of the 2017 LSIS. The producer price index (PPI) has not been released due to low survey response rates. |
| Government Finance Statistics: Government finance statistics remain weak. The current GFS data compilation procedures use various secondary data sources, resulting in internal inconsistencies and a lack of detail on financing. Off-budget activities are not included in the fiscal data, although social security data have recently been included. STA appointed a GFS expert funded by the government of Japan to assist the Ministry of Finance (MoF) in upgrading the compilation and dissemination procedures of fiscal data in line with the GFS Manual 2014 (GFSM 2014) and improve data reporting to the IMF. With assistance from the GFS expert, the authorities reduced data discrepancies and submitted quarterly fiscal data for publication in the GFS Yearbook and International Financial Statistics, but with some lags. Despite recent improvements, timely data dissemination, coverage, and accuracy still need further improvements. Annual GFS time series have been published in the MoF website for the first time in 2019. However, Public |
| Sector Debt Statistics are still incomplete, and have not been disseminated. Lao P.D.R. does not currently provide data on the stocks of central government and central government guaranteed debt to the Fund as required under Article VIII, Section 5 due to capacity constraints addressed above. |
| Monetary and Financial Statistics: The classification of monetary data by institutional sector and by financial instruments as well as valuation principles need to be strengthened. In addition, the timeliness of reporting needs further improvement. The latest monetary data reported to STA refer to December 2010. The compilation of monetary data based on Standardized Report Forms (SRFs) have yet to be introduced. Lao P.D.R. reports data on some key series and indicators of the Financial Access Survey (FAS), including the two indicators adopted by the UN to monitor Target 8.10 of the Sustainable Development Goals (SDGs). |
| Financial Sector Surveillance: Progress has been made as BOL started to disseminate seven of the 12 core Financial Soundness Indicators (FSI) (except for those related to liquidity and market risk) on their own website but the underlying financial statements (e.g. balance sheet, income statement, supervisory series) as well as metadata are missing. Lao P.D.R. is yet to compile and submit to STA financial soundness indicators consistent with the methodology of the IMF FSI Compilation Guide. |
| 1. External Sector Statistics: STA providing TA through the External Sector Statistics (ESS) Advisor appointed at the IMF Capacity Development Office in Thailand (CDOT) for the beneficiary countries including Lao P.D.R. whose activities are funded by the government of Japan under the Project on the Improvement of ESS in the Asia–Pacific region. Under the project, the Bank of Lao P.D.R. (BOL) has successfully implemented the first nationwide enterprise survey for International Investment Position (IIP) in 2018; and is repeating the survey this year. Previous years’ TA missions have largely focused on assisting the BOL—the ESS compiling agency—in establishing a compilation framework for the IIP and external debt statistics (EDS) and improving estimation models for some key components of the primary and secondary income account. Work on EDS is in progress, pending committed support by the Ministry of Finance in providing timely data at higher frequency, and verifying data on state-owned enterprises’ EDS incurred in the past. Draft IIP and EDS statements have been generated for authorities’ internal use and is pending management approval for dissemination to the public. The main focus of TA missions has shifted to improving the coverage of trade in goods and services data, which would in turn address the currently understated trade deficits. Lao P.D.R. does not currently provide IIP data to the Fund as required under Article VIII, Section 5 due to capacity constraints addressed above. |
| II. Data Standards and Quality |
| Lao P.D.R. has been an Enhanced General Data Dissemination System (e-GDDS) participant since November 22, 2018 and implemented the e-GDDS by launching a National Summary Data Page on November 27, 2018. |
| I. Assessment of Data Adequacy for Surveillance |
| General: Data provision has serious shortcomings that significantly hamper surveillance, especially regarding national accounts, government finance, financial sector, and external sector statistics. These shortcomings are mostly due to lack of capacity which could be addressed through further efforts on the part of the authorities involved. The IMF is conducting technical assistance (TA) and training programs to address the specific needs with a focus to mitigate near-term risks, covering the areas of national accounts, prices, government finance statistics, monetary and financial statistics, and external sector statistics. |
| National Accounts: National accounts (NA) comprise annual estimates of GDP by activity at current and constant prices. Rebased national accounts (base year=2012) were released in early 2017 with the help of a World Bank expert, broadly following the System of National Accounts (SNA) 1993 (includes part of 2008 SNA). Lao P.D.R. participated in the IMF’s Statistics Department (STA) project to implement the SNA and International Comparison Project (ICP), funded by the government of Japan through the Japan Administered Account for Selected Activities (JSA), and has received technical assistance (TA) to improve annual national accounts and develop quarterly national accounts (QNA). Under this project, Lao P.D.R. made some methodology improvements in the annual GDP by activity estimates, and has moved closer to completing a new annual expenditure measure of GDP and a preliminary GNI series. However, there are some weaknesses in data sources, particularly on intermediate consumption of businesses. Some progress had also been made toward the development of a new quarterly GDP series, together with GDP by expenditure. |
| Price Statistics: The monthly consumer price index (CPI) for Lao P.D.R. was updated during 2016. Coverage was extended from 12 to all 18 provinces, the number of basket items increased from 245 to 485, and expenditure weights were updated using the results of the 2012 Lao Social Indicator Survey (LSIS). However, the full list of the updated weights has not yet been disclosed. To ensure that the index remains representative of current expenditure patterns, the Lao Statistics Bureau should prioritize the update of the expenditure weights using the results of the 2017 LSIS. The producer price index (PPI) has not been released due to low survey response rates. |
| Government Finance Statistics: Government finance statistics remain weak. The current GFS data compilation procedures use various secondary data sources, resulting in internal inconsistencies and a lack of detail on financing. Off-budget activities are not included in the fiscal data, although social security data have recently been included. STA appointed a GFS expert funded by the government of Japan to assist the Ministry of Finance (MoF) in upgrading the compilation and dissemination procedures of fiscal data in line with the GFS Manual 2014 (GFSM 2014) and improve data reporting to the IMF. With assistance from the GFS expert, the authorities reduced data discrepancies and submitted quarterly fiscal data for publication in the GFS Yearbook and International Financial Statistics, but with some lags. Despite recent improvements, timely data dissemination, coverage, and accuracy still need further improvements. Annual GFS time series have been published in the MoF website for the first time in 2019. However, Public |
| Sector Debt Statistics are still incomplete, and have not been disseminated. Lao P.D.R. does not currently provide data on the stocks of central government and central government guaranteed debt to the Fund as required under Article VIII, Section 5 due to capacity constraints addressed above. |
| Monetary and Financial Statistics: The classification of monetary data by institutional sector and by financial instruments as well as valuation principles need to be strengthened. In addition, the timeliness of reporting needs further improvement. The latest monetary data reported to STA refer to December 2010. The compilation of monetary data based on Standardized Report Forms (SRFs) have yet to be introduced. Lao P.D.R. reports data on some key series and indicators of the Financial Access Survey (FAS), including the two indicators adopted by the UN to monitor Target 8.10 of the Sustainable Development Goals (SDGs). |
| Financial Sector Surveillance: Progress has been made as BOL started to disseminate seven of the 12 core Financial Soundness Indicators (FSI) (except for those related to liquidity and market risk) on their own website but the underlying financial statements (e.g. balance sheet, income statement, supervisory series) as well as metadata are missing. Lao P.D.R. is yet to compile and submit to STA financial soundness indicators consistent with the methodology of the IMF FSI Compilation Guide. |
| 1. External Sector Statistics: STA providing TA through the External Sector Statistics (ESS) Advisor appointed at the IMF Capacity Development Office in Thailand (CDOT) for the beneficiary countries including Lao P.D.R. whose activities are funded by the government of Japan under the Project on the Improvement of ESS in the Asia–Pacific region. Under the project, the Bank of Lao P.D.R. (BOL) has successfully implemented the first nationwide enterprise survey for International Investment Position (IIP) in 2018; and is repeating the survey this year. Previous years’ TA missions have largely focused on assisting the BOL—the ESS compiling agency—in establishing a compilation framework for the IIP and external debt statistics (EDS) and improving estimation models for some key components of the primary and secondary income account. Work on EDS is in progress, pending committed support by the Ministry of Finance in providing timely data at higher frequency, and verifying data on state-owned enterprises’ EDS incurred in the past. Draft IIP and EDS statements have been generated for authorities’ internal use and is pending management approval for dissemination to the public. The main focus of TA missions has shifted to improving the coverage of trade in goods and services data, which would in turn address the currently understated trade deficits. Lao P.D.R. does not currently provide IIP data to the Fund as required under Article VIII, Section 5 due to capacity constraints addressed above. |
| II. Data Standards and Quality |
| Lao P.D.R. has been an Enhanced General Data Dissemination System (e-GDDS) participant since November 22, 2018 and implemented the e-GDDS by launching a National Summary Data Page on November 27, 2018. |
Lao P.D.R.—Table of Common Indicators Required for Surveillance
(As of June 29, 2019)
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.
Lao P.D.R.—Table of Common Indicators Required for Surveillance
(As of June 29, 2019)
| Date of Latest Observation | Date Received | Frequency of Data1 | Frequency of Reporting1 | Frequency of Publication1 | |
|---|---|---|---|---|---|
| Exchange Rates | 02/2019 | 06/04/2019 | M | M | M |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities2 | 02/28/2019 | 05/10/19 | M | I | Q |
| Reserve/Base Money | 02/28/2019 | 05/10/19 | M | I | Q |
| Broad Money | 02/28/2019 | 05/10/19 | M | I | Q |
| Central Bank Balance Sheet | 02/28/2019 | 05/10/19 | M | I | Q |
| Consolidated Balance Sheet of the Banking System | 02/28/2019 | 05/10/19 | M | I | Q |
| Interest Rates3 | 02/28/2019 | 05/10/19 | M | I | M |
| Consumer Price Index | 04/30/2019 | 05/17/19 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing4—General Government5 | 05/10/2019 | 12/31/2018 | I | I | I |
| Revenue, Expenditure, Balance and Composition of Financing4—Central Government | 05/10/2019 | 12/31/2018 | I | I | I |
| Stocks of Central Government and Central Government-Guaranteed Debt6 | NA | NA | NA | ||
| External Current Account Balance | Q4 2018 | 06/04/2019 | Q | I | I |
| Exports and Imports of Goods and Services | Q4 2018 | 06/04/2019 | Q | I | I |
| GDP/GNP | 12/31/2018 | 05/06/19 | A | A | A |
| Gross External Debt | 12/31/2017 | 11/28/17 | A | A | 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.
Lao P.D.R.—Table of Common Indicators Required for Surveillance
(As of June 29, 2019)
| Date of Latest Observation | Date Received | Frequency of Data1 | Frequency of Reporting1 | Frequency of Publication1 | |
|---|---|---|---|---|---|
| Exchange Rates | 02/2019 | 06/04/2019 | M | M | M |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities2 | 02/28/2019 | 05/10/19 | M | I | Q |
| Reserve/Base Money | 02/28/2019 | 05/10/19 | M | I | Q |
| Broad Money | 02/28/2019 | 05/10/19 | M | I | Q |
| Central Bank Balance Sheet | 02/28/2019 | 05/10/19 | M | I | Q |
| Consolidated Balance Sheet of the Banking System | 02/28/2019 | 05/10/19 | M | I | Q |
| Interest Rates3 | 02/28/2019 | 05/10/19 | M | I | M |
| Consumer Price Index | 04/30/2019 | 05/17/19 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing4—General Government5 | 05/10/2019 | 12/31/2018 | I | I | I |
| Revenue, Expenditure, Balance and Composition of Financing4—Central Government | 05/10/2019 | 12/31/2018 | I | I | I |
| Stocks of Central Government and Central Government-Guaranteed Debt6 | NA | NA | NA | ||
| External Current Account Balance | Q4 2018 | 06/04/2019 | Q | I | I |
| Exports and Imports of Goods and Services | Q4 2018 | 06/04/2019 | Q | I | I |
| GDP/GNP | 12/31/2018 | 05/06/19 | A | A | A |
| Gross External Debt | 12/31/2017 | 11/28/17 | A | A | 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.