Lao People's Democratic Republic - Joint World Bank-IMF Debt Sustainability Analysis
Lao P.D.R.’s risks of external and overall debt distress continue to be assessed as high. Under the revised low-income country debt sustainability framework (LIC DSF), its debt carrying capacity has deteriorated and most external and total public d...
| Main Authors: | , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/441821570771074432/Lao-Peoples-Democratic-Republic-Joint-World-Bank-IMF-Debt-Sustainability-Analysis-August-2019 http://hdl.handle.net/10986/32557 |
| Summary: | Lao P.D.R.’s risks of external and
overall debt distress continue to be assessed as high. Under
the revised low-income country debt sustainability framework
(LIC DSF), its debt carrying capacity has deteriorated and
most external and total public debt indicators breach their
respective indicative thresholds and benchmarks under the
baseline scenarios. External debt indicators are most
vulnerable to shocks to exports and depreciation of the
currency. Public and external debt indicators are most
sensitive to the contingent liabilities shock, while recent
natural disasters underscore the need for strengthening
buffers. The low level of reserves adds to these
vulnerabilities. Factors, such as the large share of
electricity export earnings under long-term
intergovernmental power purchase agreements, and a strong
and growing electricity exports market help mitigate risks,
keeping the debt outlook sustainable. Market access is being
maintained, around 65 percent of external debt is
concessional, and the stock of expenditure arrears is
declining. Rebuilding fiscal space, adopting clear
guidelines for sovereign debt issuance and guarantees,
assessing risks from contingent liabilities, and improving
debt management are immediate priorities. Assessing and
targeting infrastructure projects with high growth and
social returns and financing these with concessional
financing would benefit debt sustainability. Strengthening
the business environment and governance, would improve the
investment outlook, help diversify and make growth more
inclusive. Increasing the export base, continuing to
maximize the proportion of concessional loans and improving
primary deficits would help to keep the debt burden contained. |
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