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The World Bank Lao PDR Country Office Patouxay Nehru Road P.O Box 345 Vientiane, Lao PDR All rights reserved This publication is a product of the staff of the World Bank. The findings, interpretations, and conclusions expressed herein not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent.
THE WORLD BANK TEAM APPRECIATES FEEDBACK ON STRUCTURE AND CONTENT OF THE MONITOR
For further information please contact World Bank Lao PDR Country Office. Mr. Somneuk Davading on structure and content (sdavading@worldbank.org) Ms. Keomanivone Phimmahasay on data issues (kphimmahasay@worldbank.org)
The World Bank Lao PDR Country Office Patouxay Nehru Road P.O Box 345 Vientiane, Lao PDR Phone: (856-21) 450- 010 Fax: (856-21) 414-210
Executive Summary
E XECUTIVE S UMMARY
Lao PDRs real GDP growth will remain robust in 2011 with projected growth of 8.6 percent compared to 8.4 percent in 2010. Natural resources and manufacturing sectors are expected to drive growth this year. The expected growth in the garment exports (by about 15-20 percent in this year) follows the EU relaxation in raw material sourcing requirement and increased orders by key garment producers. The service sector also shows signs of improvement, particularly in transport, tourism (hotels and restaurants) and retail trading. Agriculture (fishery, livestock and crops) is expected to benefit from the recent increase in regional demand and higher food prices. Out of 8.6 percent growth in 2011, about 3.6 percentage points come from the resource sectors, about 1 percentage point each from manufacturing and agriculture, 0.5 percentage points from construction and 2.5 percentage points from services. The Consumer Price Index (CPI) headline inflation has risen in recent months due to higher commodity prices. Recent global food prices have limited impact on Lao inflation, as domestic food prices follow global trends in a limited extent due to the subsistence nature of food production and relatively limited food exports. The recent rise in energy (fuel) and other nonfood prices is putting upward inflationary pressures on the country. The CPI inflation (yoy) has increased to about 7.7 percent in March 2011 from 5.8 percent in December 2010 driven largely by fuel. Fuel prices (yoy) climbed by 8.7 percent in March 2011 from 3.7 percent in December 2010 while core inflation (excluding food and energy) rose from 2.6 percent to 7.5 percent during the same period. By contrast, food inflation (especially locally-produced core food items, such as sticky rice, meat and vegetables) has declined during the last six months to 7.2 percent in March 2011 from 14.2 in September 2010 supported partly by Governments inflationary control measures, such as increase in food supply to the local markets (using rice reserves), a stable exchange rate policy, and temporary ban on rice exports from the country as well as increase of the rice stockpile in 2011. Nevertheless, food prices in Lao PDR remain vulnerable to shocks, especially natural disaster (flood and draught), animal disease outbreak and other seasonal factors. The annualized inflation is about 6 percent in 2010 and projected at around 7.0 percent in 2011. Higher copper and gold prices, combined with the withdrawal of quasi fiscal spending are pushing the fiscal deficit down this year. The budget deficit is expected to drop to 2.8 percent in FY10/11 from 5.7 percent of GDP in FY09/10 due to slow expansion of expenditure (for both current and capital spending) and projected higher revenue (especially resource tax revenues) as well as strong GDP growth. Domestic revenue is expected to increase to 14.4 percent of GDP in FY10/11 from 13.3 percent in FY09/10 following anticipated transfers of taxes, royalties and dividends from the resource sectors as a result of higher commodity prices. Thus, the resource revenue to GDP ratio is projected to climb significantly to 4.1 percent in this fiscal year from 2 percent in FY09/10. In the same time, the non-resource revenue to GDP ratio is likely to drop from 11.9 percent to 11.3 percent due to high GDP growth and slower expansion in non-resource revenue (about 10 percent growth in nominal terms). The non-mining as well as non-resource deficits are expected to increase slightly to 6.3 percent and 11 percent of GDP in this fiscal year from 6.2 percent and 10.9 percent in FY09/10, respectively. The total revenue (including grants) is expected to increase to 18.3 percent of GDP from 17.5 percent in FY09/10 driven by higher non-project grants (about 3.3 percent of GDP). Overall spending is expected to decline to 21.1 percent of GDP in FY10/11 from 22.3 percent in FY09/10. This is due to the phasing out of quasi-fiscal spending (domestically funded capital expenditure) and a decline in recurrent spending (due to the completion of major events, such as the South East Asia Games and the 450th Anniversary of the Vientiane Capital). The wage bill is expected to remain stable this fiscal year while an increase (in nominal terms) for compensations and transfers is budgeted to support expansion of public services to remote areas, especially for social sectors. Lao export earnings are projected to soar in 2011 driven by higher commodity prices and increased regional demand. Lao exports grew rapidly by almost 43 percent (in nominal terms) in 2010 (boosting total merchandise exports to about $2 billion) and are projected to grow by nearly 30 percent in 2011 driven largely by resource exports (electricity and copper). Resource export growth (in nominal terms) is estimated at 59 percent in 2010 and about 32 percent in 2011 contributing to further increase in resource trade surplus in this year (to $1,224 million - or about 13.9 percent of GDP - from $915 million in 2010). Similarly, non-resource exports are expected to grow by 26 percent in 2011 (or to $732 million - about 8.3 percent of GDP - from $581 million in 2010). Imports rose by about 11 percent in 2010 and are expected to grow by 22 percent in 2011 driven by higher imports of capital and consumption goods as well as the rise in petrol prices (of which resource imports about $836 million - or around 9.5 percent of GDP - compared to $596 million in 2010). The
big increase in consumer imports is likely to widen non-resource trade deficit in 2011 (to $1,716 million - or 19.5 percent of GDP - from $1,517 million in 2010). Although overall trade balance is expected to improve the current account deficit is expected to widen slightly to about 9.4 percent of GDP in 2011 from about 8.6 percent in 2010 mainly on the account of larger transfers of profits and debt service payments abroad by large resource projects. Thus, resource current account surplus is expected to decrease to 4.8 percent of GDP in this year from about 5.5 percent in 2010. Non-resource current account deficit is expected to increase to $1,237 million in 2011 - or about 14.1 percent of GDP - from $1,056 million in 2010 driven by higher non-resource imports. The capital account surplus is projected to increase from 9.9 percent of GDP in 2010 to 12.1 percent in 2011 with a corresponding surge of new investment, especially from large resource mega projects such as the Hongsa Lignite power plant, the expansion of the Phubia Mining gold production facility, other small and medium-sized hydropower and other non-resource projects. As a result, resource capital account surplus is projected to rise to 8 percent of GDP in 2011 from 5.1 percent in 2010. In the same time, non-resource capital account surplus is likely to decrease to 4.2 percent of GDP in 2011 from 4.7 percent in 2010 due to high GDP growth. Overall balance was in surplus at 1.3 percent of GDP in 2010 and is expected to increase to 2.8 percent in 2011 due to strong resource account surplus (about 12.7 percent of GDP in this year compared to 10.7 percent in 2010). Net foreign assets (NFA) and foreign reserves picked up by the end of 2010 after continuous decline during the preceding two quarters. Foreign exchange reserves dropped sharply by 18 percent (yoy) in the third quarter, recorded at $531 million. Nevertheless, they started to bounce back in the fourth quarter following transfers of operational expenditures and taxes payments of foreign companies and equity investment in the 2 listed state-owned companies in the recently opened new stock exchange through IPOs denominated in Kip, thereby bringing in dollars in official reserves. As a result, foreign reserves reached more than $720 million by end-2010 (covering 3.1 months of imports of goods and services). Net foreign assets have followed a similar pattern with a rebound of more than 10 percent (quarter on quarter) in the fourth quarter. Reserves and NFA are expected to build up in coming months in 2011 along with stronger investment inflows and larger tax profits payments from mining projects. The Lao kip has appreciated slightly against the US dollar in the past few months while depreciating against the Thai baht. The kip has appreciated marginally by 0.2 percent against the US dollar during February-March but depreciated by 2.3 percent against baht in the same time. Overall, kip has appreciated by 0.9 percent against the US dollar and by 0.4 percent against baht during the last six months (October 2010 - March 2011). Credit growth has slowed by end-2010 due to the phasing out of the BOLs direct lending to local government projects and increasing drying up of bank liquidity. The credit growth decelerated y-o-y to about 46 percent in December 2010 from 91 percent in December 2009 due to significant slowdown in lending to both SOEs and private sector. Credit to SOEs declined mainly due to the phasing out of the Bank Of Laos (BOL) direct lending to local infrastructure activities while private credits slowed partly because of recent tightening of bank liquidity (the commercial banks loan to deposit ratio rose to about 75 percent in 2010 from 55 percent in 2008) as well as BOLs guidance to slow rapid credit growth and reduce NPL risks. The GOL (BOL) is anticipating credit growth to stabilize at around 25-30 percent in 2011. Broad money (M2) grew fast (yoy) by 39.1 percent in 2010 and this trend is expected to continue in 2011, driven by strong GDP growth and high deposits (which grew by 43.3 percent in 2010). The dedollarisation rate increased to 46.2 percent in 2010 from 42.2 percent in 2009 as local peoples confidence in kip has risen notably in recent years. Structural reforms have been progressing on different fronts. The treasury reform continues to gain pace with good progress being achieved in consolidation of spending units accounts into the National Treasury and the launch of the pilot of Treasury zero-balance account at the BOL and its provincial branches. The Government has started implementation of the new public investment management mechanism, which includes allocation norms for the capital budget. The application of the formula has resulted in a public investment program PIP allocation more favorable to poorer provinces. With regard to regional and global integration, a Prime Ministers decree on Import and Export of Goods, which will introduce national treatment and most favored nation principles into Lao Law, is expected to be signed by the Prime Minister in the near future (The decree has been reviewed and approved in principles by the GOL very recently). This decree is the last piece of requirement for WTO accession. The preparation of Trade Facilitation Strategy and Action Plan, which envisages improved coordination among concerned agencies and strengthened institutional set up for trade facilitation issues, has progressed well.
TABLE OF CONTENTS
EXECUTIVE SUMMARY PART I
1.1 GROWTH AND INFLATION 1.2 GOVERNMENTS REVENUE AND EXPENDITURE 1.3 EXTERNAL BALANCE 1.4 MONETARY SECTOR 1 6 6 8 10 12 14 14 17 18 19 21 22 23
PART II
2.1 PUBLIC EXPENDITURE POLICY AND MANAGEMENT REFORMS 2.2 FINANCIAL SECTOR REFORM 2.3 TRADE REFORM 2.4 PRIVATE SECTOR DEVELOPMENT
ANNEXES
ANNEX 1 LAO PDR AT A GLANCE TABLE ANNEX 2 GLOBAL ECONOMIC OUTLOOK ANNEX 3 - ACRONYMS AND ABBREVIATIONS
Figure 1. Growth and Inflation, (percent change) Figure 2. Resource Sectors Contribution to GDP Growth, (percentage points) Figure 3. Real GDP Growth: Contribution by Sector (percentage points) Figure 4. Monthly CPI Inflation (yoy percent change) Figure 5. Food Prices (yoy percent change) Figure 6. Lao Glutinous Rice Price vs Thai Figure 7. Domestic Revenues (percent of GDP), FY08-12 Figure 8. Resource Revenues (percent of GDP), FY08-12 Figure 9. Key Government Expenditures (percent of GDP), FY2008-12 Figure 10. GOLs Fiscal Performance (percent of GDP), FY2008-12 Figure 11. Exports by Sector (US$ m), 2007-12 Figure 12. Current Account Balance - CAB (percent of GDP), 2007-2012 Figure 13. Balance of Payments (percent of GDP), 2007-12 Figure 14. FDI in Lao PDR (US$ million), 2007-12 Figure 15. Kip Exchange Rate (Index Dec-2006 =100) Figure 16. Nominal and Real Effective Exchange Rates Figure 17. NFA and foreign reserves have rebounded Figure 18. Credit growth has declined by end-2010 Figure 19. Contribution to Annual Bank Credit Growth Figure 20. Monetary sector growth (yoy percent change) Figure 21. Bank Lending (percent of GDP) Table 1. GOLs four priority sectors expenditures
Note: all dollar figures are in US dollars unless otherwise indicated.
6 6 7 7 7 8 8 9 9 9 10 11 11 11 12 12 13 13 13 13 13 17
PART I
8.4
8.6 7.6
10 8 6 4 2 0
2.0 5.6 7.6 5.0 7.2 7.5 7.5
8.4
8.6 7.6
7.0
4.6
5.0 5.3
6.5
2.5
3.9
3.6
2.3
2009
2010
2011
2012
-2
2007
-0.4
2008
2009
2010
2011
2012
Source: GOL (MPI) and staff estimates and projections. * Yearly average for 2011
Source: GOL (MPI) and staff estimates and projections. * Yearly average for 2011-15
1 Hydropower (with full operation of NT2, new operations of Nam Ngum 2 and Nam Lik 1-2) and sustained mining extraction (copper and gold output expansion by MMG and Phubia projects). 2 Based on steady growth in cement and construction materials, as well as the garment and food and beverage industries. 3 Almost 3 percentage points come from the electricity sector (out of which around 1.3 percentage points come from NT2 and the rest from Nam Ngum 2 and Nam Lik 1-2). About 0.6 percentage points come from the mining sector - mostly copper and gold.
3.4
6 4 2 0 -2 -4
Food prices in Lao PDR follow to a limited extent the global trend due to the subsistence and limited tradable nature of food consumption. However, they may be linked to regional markets for glutinous rice in Thailand and Northern Viet Nam. Commercialized rice (especially sticky rice which is predominant food in Lao PDR) is influenced by localized supply shocks and seasonality. Unlike Thailand and Vietnam
Feb-09
Feb-10
2.7 2.9
Although until now recent global food price increases have had limited impacts on overall Lao CPI inflation, the rise in fuel and other nonfood prices and uncertainty in global commodity markets is putting upward pressures on the CPI inflation. The headline inflation has increased in recent months due to energy and other nonfood commodity prices. The CPI inflation (yoy) has increased in recent months to about 7.7 percent in March 2011 from 5.8 percent in December 2010 driven largely by fuel and other nonfood prices. Fuel prices (yoy) climbed by 8.7 percent in March 2011 from 3.7 percent in December 2010 while core inflation (excluding food and energy) rose from 2.6 percent to 7.5 percent during the same period. However, the food inflation (especially locally-produced core food items, such as sticky rice, meat and vegetables) has declined during the last six months to 7.2 percent in March 2011 from 14.2 in September 2010 supported by Governments inflationary control measures, such as increase in food supply to the local markets (using rice reserves), a stable exchange rate policy, and temporary ban on rice exports from the country as well as increase of the rice stockpile in 2011. Nevertheless, food prices in Lao PDR remain vulnerable to shocks, especially natural disaster (flood and draught), animal disease outbreak and other seasonal factors. The annualized inflation is about 6 percent in 2010 and projected at around 7.0 percent in 2011.
Figure 4. Monthly Inflation (yoy percent change) Fig 4 FFigure 4. Monthly Inflation (yoy percent change)
igure
Energy inflation (percentage points) Food inflation (percentage points) Energy inflation (percentage points) Core inflation (percentage points) Food inflation (percentage points) Headlineinflation (percentage points) Core inflation (%, annual average) Headline inflation (%, annual average)
6.8 6.8
3.2 2.4 3.2 1.6 2.4 0.7 1.6 -0.2 0.7 -1.6 -0.2 -1.6-1.8 -1.8 -1.5 -2.3 -1.5 -2.3 -1.8 -1.8 -0.1 1.5 -0.1 3.9 1.5 3.9 4.2 4.2 4.7 4.7 4.9 4.9 4.8 4.8 4.8 4.8 4.9
0 2 -2 0
4 6 2 4
Source: Lao PDR authorities (MPI) and staff calculations. Source: Lao PDR authorities (MPI) and staff calculations.
11.1
12 10 8
8.6
6.0 5.0
6.8
Dec-09
Dec-08
Aug-09
Aug-10
Dec-10
Oct-09
Apr-10
Apr-09
Oct-10
Jun-09
Jun-10
8.8
Dec-08 Dec-08 Mar-09 Mar-09 Jun-09 Jun-09 Aug-09 Aug-09 Oct-09 Oct-09 Dec-09 Dec-09 Feb-10 Feb-10 Apr-10 Apr-10 Jun-10 Jun-10 Aug-10 Aug-10 Oct-10 Oct-10 Dec-10 Dec-10 Mar-11 Mar-11
Rice Vegetables Meat Poultry Fish The rest Total food inflation (%, y-o-y)
-4 -2 -4
4.9
8 10 6 8
8.0 8.0 8.1 8.1 7.9 6.7 7.9 5.8 6.7 5.8
10
who produce and exports mainly ordinary (non-glutinous) rice to the international markets, Lao PDR produces mostly glutinous (sticky) rice around 90 percent of total rice outputs, which are mostly consumed domestically. Estimates suggest that about 10 percent or 300,000 metric tons is commercialized, some of which may be exported to regional markets in neighboring countries. Anecdotal evidence shows increased formal and informal milled glutinous rice exports to Vietnam, and to a lesser extend exports of paddy to Thailand may have been behind the stark increase of rice prices over the 2nd quarter of 2010. Government reacted by restricting formal; cross-border rice exports, has issued a stockpiling policy, and is considering imposing price controls. It remains unclear how price controls can be effectively implemented at the provincial and district level.
Source: Lao authorities (DOS) and Thai Rice Exporters Association and staff calculations.
Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
such as the South East Asia Games and the 450th Anniversary of the Vientiane Capital). The wage bill is expected to remain stable this fiscal year while an increase (in nominal terms) for compensations and transfers is budgeted to support expansion of public services to remote areas, especially for social sectors.
F 8
14 12 10 8 6 4 2 0
10.8
11.0
13.9 12.5
5.5
3.1
2.4 0.7
5 0
2.7 2.2
2.7 1.6
1.8
FY08
FY09
FY10
FY11
FY12
Source: Lao PDR authorities (MOF) and staff calculations and projections
Source: Lao PDR authorities (MOF) and staff calculations and projections.
FY08
FY09
0.5
FY10
FY11
FY12
F 10
25 20 15 10 5 0 -5 -10 -15
13.4 18.1
Fig Figure 10. GOLs Fiscal Performance (percent of igure GDP), FY2008-12
Revenue and grants Budget deficit Nonresource deficit
22.6 22.7
25 20 15 10 5 0
7.0 18.1
22.6
22.7
-6.3 -11.0
-2.8
Source: Lao PDR authorities (MOF) and staff calculations and projections.
FY08
FY09
FY10
FY11
FY12
Source: Lao PDR authorities (MOF) and staff calculations and projections.
-7.1 -11.8
-2.5
FY08
FY09
FY10
FY11
FY12
15.9
10.9
9.5
9.5
18.2
9.8
0.9
Imports are also expected to rise at a quicker pace in 2011. Imports rose by about 11 percent in 2010 and are expected to grow by 22 percent in 2011 driven by higher imports of capital and consumption goods as well as the rise in petrol prices. The large increase in consumer imports (due to increase in demand and commodity prices) is likely to widen non-resource trade deficit in 2011 (to about $1,716 million - or around 19.5 percent of GDP - from $1,517 million in 2010). The commencement of construction of the Hongsa Lignite power plant and the expansion of the Phubia Mining gold production facility are expected to significantly contribute to import rise in 2011. Overall, Lao PDRs trade deficit has narrowed in recent years (from about $1,033 million in 2008 to $602 million in 2010 and is projected to decline further to $492 million in 2011) due to strong resource export growth (which is expected to outweigh import expansion).
F 11
3000 2500 2000 1500 1000 500 0 2007
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: Staff estimates and projections based on data from Lao authorities (MOIC) and partner countries
Current Account Balance The current account deficit has become increasingly exposed to mining export earnings, thereby offsetting a large non-resource current account deficit. The current account deficit is projected to widen slightly due to larger net income transfer in 2011. Although the overall trade balance is expected to improve slightly, the current account deficit is projected to widen to about 9.4 percent in 2011 from about 8.6 percent in 2010 mainly on the account of larger transfers of profits 4 and debt service payments abroad by large resource projects - see Figure 12. Resource current account surplus is expected to decrease to 4.8 percent of GDP in 2011 from about 5.5 percent in 2010 due to notable increase in net income transfers abroad (especially debt services from power projects including Hongsa Lignite Power Plant). Mining current account 5 surplus is expected to rise to 9.7 percent of GDP in 2011 from about 9.1 percent in 2010 and, in the same time, power sec6 tors current account deficit is likely to widen in 2011 and 2012 (due to large increase in interest payments). Non-resource current account deficit is expected to increase to $1,237 million in this year from $1,056 million in 2010 driven by higher non-resource imports. Nevertheless, its GDP ratio remains unchanged at 14.1 percent in 2010-2011 - see Figure 12 below.
F 12
20 10 0
3.3
igure Fig Figure 12. Current Account Balance - CAB ( (percent of GDP), 2007-2012
Mining CAB Power CAB Non-resource CAB Current account balance (CAB)
9.4 5.1 9.2 9.5 8.3
-8.8
-3.6
-4.8
-10.6
-11.9
-11.8
-11.9
-6.6
-14.2
-14.1
-9.4
-14.1
-10.6
2007
2008
2009
2010
2011
2012
-12.2
2015
2002
2003
2004
2005
2008
2009
2010
2011
2012
Capital Account Balance The commencement of resource sector investment in pipeline will enhance capital account surplus in 2011. The net flow of capitals declined to 9.8 percent in 2010 from 12.3 percent of GDP in 2009 due to a temporary plunge in foreign investments in the resource sectors (especially hydropower - see Figure 13) and a large increase in income transfers by resource projects (repatriation of profits of around $384 million compared to about $105 million in 2009). However, the capital account surplus is expected to rebound to 12.2 percent in 2011 with a corresponding surge of new investment especially from large resource mega projects such as Hongsa lignite coal-fired power plant ($3.7 billion project), Phubias new gold production facility (about $150 million) and several other medium and smaller investment projects across non-resource sectors (especially construction and services) - see Figure 14. As a result, resource capital account surplus is projected to rise to 8 percent of GDP in 2011 from 5.1 percent in 2010. In the same time, non-resource capital account surplus is likely to decrease to 4.2 percent of GDP in 2011 from 4.7 percent in 2010 due to high GDP growth. Overall balance was in surplus at 1.3 percent of GDP in 2010 and is expected to increase to 2.8 percent in 2011 due to strong resource account surplus (about 12.7 percent of GDP in this year compared to 10.7 percent in 2010).
Figure 13. Balance of Payments (percent of GDP), igure Fig Figure 13. Balance of Payments (percent of GDP), 2007-12 2007-12
Mining CAB Mining CAB Non-resource CAB OverallNon-resource CAB balance Overall balance
23.9 20.6 20.6
F 13
3023.9 20 10 0 -10 -20 -19.2 -30 2007
4.7 4.7
F 14
1400 1400 1200 1200 1000 1000 800 800 600 600 400 400 200 200 0 0
Figure 14. FDI in Lao PDR, 2007-12 (US$ million) Figure 14. FDI in Lao PDR, 2007-12 (US$ million) igure
Agriculture Services Agriculture Power Services Net Power FDI flows Net FDI flows Manufacturing, etc. Mining Manufacturing, etc. Gross Mining FDI inflows Gross FDI inflows
1300 1103 838 838 976 976 774 774 761 761 1103 1300
Power CAB CAB Power CAB CapitalCAB account balance Capital account balance
12.3
12.3 2.9
12.1 1.5
12.1 1.5
1.9
1.9 -1.3
-8.6
-9.4
-9.4
-10.6
-10.6
2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012
Source: BOL and staff estimates and projections. Source: BOL and staff estimates and projections.
2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Source: MPI and staff estimates and projections. Source: MPI and staff estimates and projections.
4 Resource current account surplus covers trade balance and net income from the mining and hydropower sectors. 5 The surplus in mining trade balance has off-set the transfers of prots and debt service payments abroad and thereby contributed to mining current account surplus. 6 Decits on the sectors trade balance and net income contributed to power sectors current account decit.
11
Net foreign assets and foreign reserves picked up by the end of 2010 after continuous decline during the preceding two quarters. Foreign exchange reserves dropped sharply by 18 percent (yoy) in the third quarter, recorded at $531 million. Reserves started to bounce back in the fourth quarter following transfers of operational expenditures and taxes payments of foreign companies and new foreign investments. Foreign reserves reached more than $720 million by end-2010 (covering 3.1 months of imports of goods and services). Net foreign assets have also followed a similar pattern with a rebound of 13.5 percent (yoy) by end-2010, reaching more than $750 million. The slowing down of credit growth as of end 2010 has eased the pressure on foreign reserves and NFA levels. The net foreign assets (NFA) and international reserves are expected to rise in 2011 and beyond with a projected strong growth in exports and rebound in net capital inflows combined with anticipated further slowdown in credit growth in 2011 (see more details in Bank Lending below).
Figure 16. Figure 15 . Kip Exchange Rate (Index Dec-2006 =100) Figure 15 . KipFigure 15 . 15 . Kip Exchange Rate=100) Dec-2006 =100) Exchange Rate (Index Dec-2006 (Index Figure 16. 16. Nominal and Real Effective Exchange Rates Figure igure Fig =100) igure Figure Kip Exchange Rate (Index Dec-2006Figure 16. Nominal and RealNominal and Real Effective Exchange Rates Effective Exchange Rates NEER Nominal and Real Effective Exchange Rates REER Kip/US$ Kip/Baht
Kip/US$ Kip/Baht Kip/US$ 110 Kip/US$ 105 100 95 90 85 80 Kip/Baht Kip/Baht 130 125 120 115 110 105 100 95 90 130 125 120 115 110 105 100 95 90 NEER 110 110 105 105 100 100 95 95 90 90 85 85 80 80 130 125 120 115 110 105 100 95 90 130 125 120 115 110 105 100 95 90 REER NEER NEER REER REER
F 15
F 16
10
05
00
95
90
80
Jun-08
Jun-09
Jun-10
Mar-09
Bank Lending Credit growth has slowed by end-2010 due to the phasing out of the BOLs direct lending to local government projects and the slowdown of private credit. The credit growth decelerated y-o-y to about 46 percent in December 2010 from 91 percent in December 2009 due to significant slowdown in lending to both SOEs and private sector. Credit to SOEs declined mainly on the account of the phasing out of BOLs direct lending to projects while private credits slowed partly because of recent tightening of bank liquidity (the commercial banks loan to deposit ratio rose to about 75 percent in 2010 from 73 percent in 2009 and 55 percent in 2008) and GOLs policy to slow rapid credit and
Mar-10
Dec-10
Dec-08
Dec-09
Sep-09
Sep-10
Sep-08
Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Dec-06 Jun-08 Mar-07 Dec-06 Sep-08 Jun-07 Mar-07 Dec-08 Sep-07 Jun-07 Mar-09 Dec-07 Sep-07 Jun-09 Mar-08 Dec-07 Dec-06 Sep-09 Jun-08 Mar-08 Mar-07 Dec-09 Sep-08 Jun-08 Jun-07 Mar-10 Dec-08 Sep-08 Sep-07 Jun-10 Mar-09 Dec-08 Dec-07 Sep-10 Jun-09 Mar-09 Mar-08 Dec-10 Sep-09 Jun-09 Jun-08 Mar-11 Dec-09 Sep-09 Sep-08 Mar-10 Dec-09 Dec-08 Jun-10 Mar-10 Mar-09 Sep-10 Jun-10 Jun-09 Dec-10 Sep-10 Sep-09 Mar-11 Dec-10 Dec-09 Dec-06 Mar-11 Mar-10 Mar-07 Jun-10 Jun-07 Sep-10 Sep-07 Dec-10 Dec-07 Mar-11 Mar-08 Dec-06 Jun-08 Mar-07 Sep-08 Dec-06 Jun-07 Dec-08 Mar-07 Sep-07 Mar-09 Jun-07 Dec-07 Jun-09 Sep-07 Mar-08 Sep-09 Dec-07 Dec-06 Jun-08 Dec-09 Mar-08 Mar-07 Sep-08 Mar-10 Jun-08 Jun-07 Dec-08 Jun-10 Sep-08 Sep-07 Mar-09 Sep-10 Dec-08 Dec-07 Jun-09 Dec-10 Mar-09 Mar-08 Sep-09 Mar-11 Jun-09 Jun-08 Dec-09 Sep-09 Sep-08 Mar-10 Dec-09 Dec-08 Jun-10 Mar-10 Mar-09 Sep-10 Jun-10 Jun-09 Dec-10 Sep-10 Sep-09 Mar-11 Dec-10 Dec-09 Mar-11 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11
Source: BOL and staff calculations. Source: BOL and staff calculations. staff staff calculations. Source: BOLBOL and calculations. Source: and Source: IMF Source: IMF Source: IMF IMF Source:
85
F 17
125 100 75 50 25 0 -25
45 35 25 15 5 -5 -15
reduce future NPL risks. Private credit growth slowed to 43.8 percent in December 2010 from 88 percent in end2009 while credit to SOEs dropped to 53.4 percent from 99.8 percent at end-2009. The GOL (BOL) is projecting credit growth to stabilize to about 25-30 percent in 2011. Broad money (M2) grew fast (yoy) by 39.1 percent in 2010 (compared to 31 percent in 2009) and this trend is expected to continue in 2011, driven by strong GDP growth (8.4 percent in 2010 and projected 8.6 percent in 2011) and high deposits (which grew by 43.3 percent in 2010 and projected 30-40 percent in this year). Overall, kip deposits increased (yoy) by 57 percent while foreign currency 7 deposits climbed by 33.2 percent in 2010. The dedollarisation rate increased to 46.2 percent in 2010 from 42.2 percent in 2009. As percent of GDP, total credit was 25.9 percent, M2 about 33.7 percent and deposits around 27.6 percent in 2010. The reported non-performing loans (by BOL) dropped from 3.7 percent in June 2010 to about 3 percent in end-2010. It is not clear however whether this improvement is due to enhanced loan portfolios of banks or a mechanic impact from new loans expansion.
Figure 19. Contribution to Annual Bank Credit igure Growth (yoy percent change) t growth has declined by end-2010 Figure 19. Contribution tohas declined by end-2010private sector (percentage points) Contribution to An Figure 18. Credit growth Annual Bank Credit to Figure 19. Credit Credit to private sector Credit to SOEs Credit to SOEs (percentage points) Growth Deposits Credit to the economy Growth Credit to the economy (yoy percent change)
(yoy percent change) 200 Credit to SOEs 150 Credit to the economy 100 50 200 120 100 80 150 60 40 100 20 050 -20 -9 -40 0
Credit to to SOEs sector 120points) Credit to SOEs Credit private (percentage 100 Deposits to the economy (yoy percent change) economy Credit to the Credit 63 80
51 21 63 66 85 83 98
F 18
F 19
6092 40 20 0 -20 -40
91 85
to private sector ts
51
66
85
83
98
92
91
85 63 59 46
63 -9 -16 -16
21 59 -1 46
-16 -16
-1
Figure Bank Lending (percent of of GDP) Figure 20. Monetary sector growth (yoy Figure 21. 21. Bank Lending (percentGDP) igureFigure 20. Monetary sector growth (yoy igure percent change)Figure 18. Credit growth Annual Bank Creditto the economy (% of GDP) 19. Contribution to A percent dit growth has declined by end-2010 change) Figure 19. Contribution tohas declined Credit to the economy (% of GDP) by Credit end-2010 Figure Total deposits (% of GDP) Total deposits (% of GDP) Growth Growth
(yoy percent change) 50 50 40 40 30 30 20 20
43.3 39.1 43.3 39.1
F 20
Broad money (M2) Broad money (M2) 200 120 100 80 150 60 40 100 20 050 -20 -9 -40 0
Dec-06 Mar-07 Jun-08 Jun-07 Sep-08 Sep-07 Dec-07 Dec-08 Mar-08 Jun-08 Mar-09 Sep-08 Jun-09 Dec-08 Mar-09 Sep-09 7.4 Jun-09 Dec-09 13.1 Sep-09 7.4 19.8 13.1 Dec-09 Mar-10 7.7 19.8 Mar-10 Jun-10 19.4 Jun-10 7.7 23.9 19.4 Sep-10 Sep-10 23.9 12.2 Dec-10 19.4 12.2 Dec-10
-16 -16
24.1 19.4
24.1 21.5
-1
29.2 26.3
34.1
Sep-09
Mar-10
Mar-09
Dec-08
Dec-09
Sep-10
Dec-10
Jun-09
Jun-10
Source: BOL staff calculations. Source: BOL and staff calculations. Source: BOL and and staff calculations.
7 In the context of Lao PDR, dedollarisation rate is the ratio of kip deposit to the total deposit (This simple formula is used by BOL as a proxy for estimating the dedollarisation rate in the country due to data limitation on composition of kip and foreign currencies outside bank).
10 10
Dec-07 Dec-08Dec-10 Mar-08 Jun-08 Mar-09 Sep-08 Jun-09 Dec-08 Mar-09 Sep-09 Jun-09 Dec-09 Sep-09 Dec-09Dec-06 Mar-10 Mar-07 Mar-10 Jun-10 Jun-07 Jun-10 Sep-10Sep-07 Sep-10 Dec-07 Dec-10 Mar-08 Dec-10 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Dec-06 Mar-10 Mar-07 Jun-10 Jun-07 Sep-10 Sep-07 Dec-10 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
-9 -16 -16 -1
Mar-09
Mar-10
Dec-09
Sep-09
Sep-09
Jun-09
Dec-09
Jun-09
51 21
F 21
Credit to to SOEs sector Credit to Loan/deposit ratio right axis) SOEs Credit private (percentage points) Loan/deposit ratio (%, (%, right axis) Deposits to the economy (yoy percent change) economy Credit to the Credit 74.5 74.5
63 66
51 21
73.0 73.0 40 40 80 120 35 35 83 98 92 91 85 85 100 55.2 55.2 63 59 80 30 30 52.5 52.5 60 46 60 25 25 37.9 37.9 40 20 20 20 40 0 15 15 -20 -9 -16 -40 10 10 20 5 5 0 0 0 2006 2007 2007 2008 2008 2009 2009 2010 2010 2006
80 60 40 20 0
-16 -1
83
51 21
13
PART II
Key Reform Progress The operationalization of the revised Budget Law continues to progress, through the implementation of the PFMSP medium-term plan. The GOL has completed the centralization of the Treasury, Customs, and Tax functions nationwide by end-2009. This has enabled greater control over the revenue sources and more timely budget execution. The revenue sharing and distribution framework has been designed and finalized while budgetary allocation norms have been prepared. Implementation of new revenue assignments between central and local levels (based on the implementing decree of the Budget Law) is expected to start in FY2010/11. A multi-donor trust fund launched in February 2009 continues to provide financial support to implementation of critical reforms under the PFMSP. A Public Expenditure and Financial Accountability (PEFA) assessment has been completed in 2010, establishing a baseline for monitoring the performance of Lao PDR PFM system over time. A Public Expenditure Review was also conducted during 2010. The results of the PEFA assessment and policy recommendations from the PER together provide inputs to the GOL for formulation of the PFMSP medium-term implementation plan for 2011-2015. The PFMSP Mid-Term Review was conducted in November 2010, reviewing the progress with PFMSP implementation and recommending reform priorities for the next five years. A medium-term PFMSP implementation plan for 2011-2015 has been formulated, incorporating recommendations from the mid-term review. A number of important reforms have been implemented to facilitate improved budget execution and treasury reform. The MOF has completed the administrative integration of provincial treasury units into the National Treasury. The Government has adopted a new decree on the National Treasury, providing a new legal basis for the treasury operations and the integration of the operations nationwide. The decree also establishes new tasks for the National Treasury, including the improved management of the Government finances. The MOF has adopted a strategy for implementing a Treasury Single Account (TSA) in the Bank of Lao PDR (BOL) with a view to consolidating all
Government cash balances in the BOL under the control of the National Treasury through transferring Government unit bank accounts to the National Treasury and improving the Government banking arrangements. The MOF together with line ministries has started the transfer of their bank accounts to the National Treasury. The MOF and BOL have started the pilot implementation of the TSA (zero-balance Treasury account) at the BOL branches as a part of the implementation of the first phase of the TSA arrangement. The MOF has completed roll-out of a locally developed government financial information system (GFIS) to all provinces and line ministries. The GFIS supports the day-to-day treasury operations both at the National Treasury and its provincial offices with following main functionalities: (i) budget recording and distribution, (ii) processing payment and receipt transactions, and (iii) fiscal reporting. The GFIS has recently been upgraded to be operated on a unified Chart of accounts and budget nomenclature aligned with Government Finance Statistics (GFS) and with centralized system architecture, allowing real time access to budget execution data once transactions are entered into the system. At the moment, the MOF has recruited an international consultant firm to help designing a full function treasury system- the Treasury Information Management System (TIMS). The consultant team is expected to start its work from mid 2011. The design consultant will provide analysis, business process review and functional requirements definition leading to an international open procurement process to identify and select a preferred product to be implemented as TIMS. All necessary ingredients for successful implementation of the VAT in the Lao PDR were put in place with the exception of IT applications, which were prepared and tested but are not yet operational. More specifically, the VAT Implementation Decree and the VAT Implementation Instructions put in place a coherent set of rules that allow for the VAT to be enforced in accordance with international standards, while detailed procedures were developed and embedded in formal instructions that allowed for proper administration and collection of the tax by the Tax Authorities. VAT law was formally entered into force since January 2010. Significant challenges remain with VAT implementation. They include full registration of businesses with a turnover above the registration threshold, making the VAT ICT system and the refund system fully operational to allow for quick processing and payment of refunds to exporters. Further training of staff and outreach to taxpayers is required to ensure that staff in charge as well as VAT Taxpayers are aware of and knowledgeable about the existing legal and procedural Instructions and that they implement these properly and consistently. In addition, Government is reviewing the General Tax Law with a view to revising it to abolish of the turnover tax and align the threshold for the application of the presumptive tax regime with the VAT registration threshold. In addition the revision would review the impact of the minimum tax on the business environment as well as the use of excise taxes as revenue source. The Lao Customs Department is now moving ahead with the introduction of the ASYCUDA World system. ASYCUDA provides a platform for the introduction of modern risk-managed techniques for customs that will streamline trade facilitation procedures and improve the efficiency of revenue collection. The first phase (currently underway and estimated to last approximately nine months) provides for the development of a prototype system. A key initial step, now almost complete, is the mapping of existing customs clearance procedures in order to identify redundancies that can be eliminated as well as changes that will need to be made as part of ASYCUDA implementation. Reforms are also ongoing as part of efforts to harmonize procedures within international norms including, for example, the introduction of the ASEAN Single Administrative Document in March 2010 and the approval of new WTO consistent regulations on Customs Valuation in July 2010. SAO continues with the implementation of its 3-year plan for capacity development and is making important impact on enhancing government accountability. SAO has completed the audit of the budget execution for FY2008/09 and submitted timely its report to the National Assembly. The debate of the audit findings at December 2010 National Assembly was live-broadcasted by TV and widely reported in public media. The NA subsequently issued a resolution to impose strict measures to correct the wrongdoings found by the audit. SAO is preparing a summary of the audit report to be disseminated to the public for the first time. SAO financial and human resources have been further strengthened with its budget allocation and staff doubled for the FY 2010-2011. The introduction of budgetary allocation norms for the education and health sectors has been progressing gradually. Effort has been made in designing the budget allocation norms since 2008 to move forward to a more
15
rule-based budgeting. Progress has been made on the technical aspects in designing formulae for the budget allocation norms for the social sectors and these formulae have been discussed and agreed in principle upon by MOF and line ministries concerned. However, the implementation has made slow progress due to inadequate explanations and insufficient understanding of the provincial and sectoral authorities on this initiative. Recently, MOF and concerned sector ministries have made their collective effort in working out the details of the unit costs, which will be used in the budget allocation norm formulae so that the budget norms for the education and health sectors can be applied from FY2011/12.
T 1
able
Significant progress has been made in improving the timeliness of civil servants salary payments and strengthening public sector performance. The GOL piloted an electronic salary payment system (ESPS) in 2008 to replace manual cash payment. Currently, salaries of all civil servants at the central level and all provinces, where ATM facilities are available, are deposited to their individual bank accounts and can be withdrawn through ATMs. Priority sectors recurrent spending as a ratio to total recurrent expenditure increased notably in FY08/09. The share of recurrent expenditure of the four priority sectors as percent of total recurrent expenditure rose to 19.9 percent in FY08/09 from 17.7 percent in FY07/08. In the same time, the ratio for education increased to 13.5 percent in FY08/09 from 12 percent in FY07/08 and, for health it climbed from 3.3 percent to 3.6 percent, respectively. However, the sectors recurrent spending to total expenditure ratio dropped slightly to 9.6 percent in FY08/09 from 9.7 percent in FY07/08 due to large increase in capital spending, especially for SEA games and other local infrastructure projects. Overall, the four sectors total spending as share of total public expenditure increased to 45.8 percent in FY08/09 from 39.7 percent in FY07/08 and, as share of GDP, it rose to 10.5 percent from 7.3 percent, respectively.
Total Priority Sectors Spending (percent of total expenditure) Total four sectors Recurrent Capital Agriculture Infrastructure** Education Health Total four sectors Recurrent Capital Agriculture Infrastructure Education Health 46.3 9.0 37.3 5.1 21.7 16.3 3.2 8.5 1.7 6.8 0.9 4.0 3.0 0.6 9.7 9.7 30.0 5.6 17.8 12.8 3.5 7.3 1.8 5.5 1.0 3.3 2.3 0.6 45.8 9.6 36.1 3.0 26.4 10.7 5.6 10.5 2.2 8.3 0.7 6.1 2.5 1.3
(percent of GDP)
Source: Lao authorities (MOF) and staff calculations. Note: * Total recurrent expenditure includes salaries and benets, transfers, administrative expenses, and other recurrent spending. ** includes off-budget spending on local infrastructure project
17
of 1 billion kip), (2) the Regulation for Savings and Credit Unions (the MFI can take deposits and lend only within their member group), and (3) the Regulation for Non-Deposit Taking MFI (it allows for a diverse set of microfinance services but relying on savings as the basis for lending). As of December 2010, there were 28 MFIs registered under BOLs regulations (compared to 10 MFIs in December 2007), with 7 deposit taking and 9 non-deposit taking and 12 SCUs. With support from donors, BOL arranged several MFI trainings on accounting, business planning, management information systems and loan delinquency management in the past year. Payments and clearance systems and credit reporting systems are still underdeveloped. There is a clearing house in the Bank of Lao PDR where banks meet once a day to clear payments which is functional. The main domestic payment instruments are cash and checks, and checks are cumbersome to use. ATMs are available to customers, but banks do not share or network. BOL is going to review and develop a legal and regulatory framework that supports payment systems development with the overall objective of improving the safety and efficiency of the national payments system as well as legitimating the settlement transactions in Lao PDR. A joint venture company was set up to provide ATM pool service with limited success so far. Efforts are being made to establish a credit bureau to complement the existing credit information bureau (CIB) at BOL. Currently, all credit reports of corporate, enterprise and personal customers with loan amount more than 20 million kip are reported to the CIB as part of the credit analysis process of all commercial banks in the country. However, further improvement is needed for small loans (mainly from Microfinance projects) as most microfinance customers do not have adequate documentation, such as passport, ID card and or House registration documents. Some measures were taken to strengthen bank supervision. The Bank of Lao PDR reviewed and updated the existing prudential ratios applying to commercial banks in accordance with Basel principles. Two revised regulations were the net open position (NOP) and loan classification regulations. Under the new guideline (No. 818, 20 October 2010), the limit of NOP of single currency and all currency increased from 15% and 20% to 20% and 25% respectively. The revision was based on the BOLs assessment of the characteristics of the Lao economy and the dollarization degree. New loan classification was also approved (No. 324 dated 19 April 2011). Under the new regulation, loans will be classified into 5 classes instead of existing 3 classes. The new Pass and Special Mention classes will be added to the existing substandard, Doubtful and Loss classes. The basic principle in loan classification will be based on number of past due date.
and establishes the principle of equal trading rights. However, key legislative gaps remain including much of the necessary subsidiary legislation relating to sanitary and phytosanitary measures, and regulations on intellectual property. Laos continues to make headway with the concluding of bilateral agreements, having signed agreements with China and Japan in 2010. Agreements have been reached, but not yet signed with India and New Zealand, and Laos is close to reaching an agreement with the EU. Eventually Lao PDRs accession to the WTO will depend on concluding agreements with all WP members on goods and services. The GOL has drafted the elements of the Working Party report, which will need to be upgraded to a full Working Party report to be submitted to the WTO Ministerial Conference or General Council by the WP. The final report will recommend that Laos be admitted as a member. The seventh Working Party meeting is planned for May 2011. Lao PDR is progressively complying with requirements to reduce tariffs under AFTA Common Effective Preferential Tariff. As of August 2009, all remaining products on the sensitive list were brought into the inclusive list, of which 71 percent of products have a zero tariff. Lao PDR is required to reduce tariffs to zero on all inclusive list products imported from ASEAN countries by the year 2015. Important work on trade facilitation is progressing with key steps taken during 2010. A national coordinating body for trade facilitation the National Trade Facilitation Secretariat was formally established in October 2010, by a Decision of the Deputy Prime Minister. A Trade Facilitation Strategy and Action Plan has also now been completed and was formally endorsed in March 2011 for submission to the government for approval. The strategy and action plan identifies an agenda for improving trade facilitation and cooperation among border agencies with a proposed implementation structure and clear responsibilities for lead agencies as well as pre-defined performance indicators. Similarly, work has progressed with the developed on customs reform and modernization with the development of a new prototype system (ASYCUDA World), with streamlined procedures. Deployment of the pilot system is due to commence at the Lao-Thai Friendship Bridge in Thanaleng in May 2011.
9 The action matrix was formulated based on the recommendations of the Diagnostic Trade Integration Study (DTIS) and is implemented under the National Integrated Framework (IF) Governance Structure.
19
21
Annex
(US$ millions) 1451 2484 1763 2602 -839 -18.5 -18.9 636 (% of GDP) 13.4 12.1 12.1 9.9 -2.7 54.0 10.4 976 15.9 13.8 12.2 10.9 -6.7 55.4 15.6 774 18.2 13.9 12.5 9.8 -4.6 51.5 16.2 761 1460 2424 1764 2551 -787 -13.6 -18.1 633 2091 2693 2481 2845 -364 -8.6 -14.1 730
Source: World Development Indicators ans staff estimates based on Lao authorities data. * Preliminary estimates for 2010
Annex T 1
able
2008
2009e
2010f
2011f
2012f
Global conditions Global conditions World Output 1/ World trade volume Consumer prices Advanced Economies United Sates Emerging and Developing Economies 2/ Developing Asia Commodity prices (percentage change of USD terms) Non-oil commodities 3/ Agriculture Food Metals and minerals Copper Oil price 4/ Manufactures unit export value 2/ London Interbank Offered Rate (%) 5/ on USD Deposits on Euro Deposits On Japanese Yen Deposits Real GDP growth World Advanced Economies United States Euro Area Japan United Kingdom Central and Eastern Europe Emerging and Developing Asian Economies Developing Asia China India Indonesia Thailand Middle East and North Africa 5.2 2.7 2.1 2.7 2.3 2.6 5.5 8.3 10.6 13.0 9.4 6.3 4.9 6.3 3.0 0.6 0.4 0.7 -0.7 0.7 3.0 6.0 7.6 9.0 7.3 6.1 2.6 5.2 -0.5 -3.4 -2.7 -4.2 -5.4 -4.4 -5.0 1.7 6.2 8.5 5.4 4.0 -3.5 1.7 5 3.0 2.8 1.7 3.9 1.3 9.4 9.5 10.3 10.4 6.1 7.8 3.8 4.4 2.4 2.8 1.6 1.4 1.7 7.9 8.4 9.6 8.2 6.2 4.0 4.1 4.5 2.6 2.9 1.8 2.1 2.3 7.9 8.4 9.5 7.8 6.5 4.5 4.2 5.2 7.3 2.2 2.9 6.4 5.4 14.1 20.1 25.7 6.2 5.9 10.7 5.5 2.4 2.0 3.0 3.0 3.4 3.8 9.3 7.5 7.5 27.2 33.9 -2.1 -2.3 36.4 7.5 0.9 0.4 -0.6 -10.7 0.1 5.2 5.0 12.4 1.6 6.2 4.4 7.4 2.2 6.9 4.5 6.9 1.7 5.3
-15.8
26.3
25.1
-4.3
Source: IMF (WEO, April 2011) Note: 1/ The quarterly estimate and projections account for 90 percent of the world purchasing power parity weights 2/ The quarterly estimates and projections account for approximately 79 percent of the emerging and developing economies. 3/ Average based on commodity export weight 4/ Simple average of prices of UK Brent, Dubai, and West Texas Intermediate crude oil. The average oil price was US$ 79.03 a barrel in 2010; the assumed price based on futures markets is US$107.16 in 2011 and US$108.00 in 2012. 5/ Six-month rate for the US and Japan. Three month rate for the Euro Area
23
Annex
AFTA ASEA ATM BCEL BOL CIB CPI DT MFI DTIS EAP EdL ESPS FDI FY GDP GFIS GFS GOL ICT IF IMF LNCCI LSX MFI MOF NA NBFI NEER
ASEAN Free Trade Area Association of Southeast Asian Nations Automatic Teller Machine Banque Pour Le Commerce Extrieur Lao Bank of Lao PDR credit information bureau Consumer Price Index Deposit Taking MFI Diagnostic Trade and Integration Study East Asia & Pacific Electricit du Lao Electronic Salary Payment System Foreign Direct Investment Fiscal Year (Oct-Sept) Gross Domestic Product government financial information system Government Finance Statistics The Government of Lao PDR Information and Communication Technology Integrated Framework International Monetary Fund Lao National Chamber of Commerce and Industry Lao Stock Exchange Micro Finance Institutions Ministry of Finance National Assembly Non-Bank Financial Institution Nominal effective exchange rate
NFA NPL NT2 ODA PEFA PIP REER SAO SOCBs SOE SPS TBT TIMS TSA VAT WB WEO WP WTO
Net Foreign Assets Non-Performing Loan Nam Theun 2 Project Official Development Assistance Public Expenditure and Financial Accountability public investment programs Real effective exchange rate State Audit Organization State Owned Commercial Banks State-Owned Enterprise Sanitary and Phyto-Sanitary Technical Barrier to Trade Treasury Information Management System Treasury Single Account Value Added Tax World Bank World Economic Outlook Lao WTO Working Party World Trade Organization
25
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