The prime minister, who was visiting Japan for the Future of Asia conference, said Laos is currently in debt to multiple countries and organisations including China, Japan, Vietnam, and the World Bank.
At the end of 2018, Laos’ public debt rose to about US$9.761 billion. This was a 14.02 percent increase over the amount owed a year earlier, according to the Bank of the Lao PDR. National debt represents 53.34 percent of the country’s Gross Domestic Product. China, Thailand and Russia are Laos’ biggest lenders in money terms through bilateral loan agreements.
The government believes that borrowing is necessary because Laos does not have sufficient money to properly develop the economy. “If we don’t borrow, Laos, as a least developed country, won’t develop further,” the Nikkei quoted Mr Thongloun as saying.He said the Lao government only borrows money for “high-efficiency projects which are long-term, with low interest rates”.Meanwhile, the government has reined in spending and proposed projects that are not considered to be highly essential have been suspended.
Since 2013, the International Monetary Fund (IMF) has been raising doubts about Laos’ ability to pay back its debts because of its moves to build the Laos-China railway and some other capital-intensive projects, the Nikkei said.
Mr Thongloun strongly denied concerns raised by many observers about a Chinese “debt trap”, saying that observers who have concern for Laos in terms of debt repayment may not have enough or sufficient information on how the government assesses those projects.
The government attaches great importance to the US$5.986 billion Laos-China railway. It is hoped that this major infrastructure project, which will help transform Laos from a landlocked country into a land link, will bring further trade and investment opportunities to Laos.
Earlier, Mr Thongloun told the Future of Asia conference, which took the theme “Seeking a new global order – overcoming the chaos”, that the Belt and Road Initiative was a good cooperation mechanism.