Lao People's Democratic Republic: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Lao People's Democratic Republic

International Monetary Fund

No 2024/319, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that in Lao People’s Democratic Republic growth gathered momentum in 2023 on the back of recovering external demand, but exchange rate depreciation continues and inflation remains persistently high. The coming increase in the government’s financing needs—especially those foreign exchange-denominated—poses severe challenges. Based on current conditions and policy settings, inflation and debt revaluation would likely intensify, implying a significant drag on growth over time. Substantial uncertainties also cloud the outlook, with risks of an intensification of labor emigration and a decline in investment should exchange rate pressures exacerbate, increased pressures on the banking sector from deteriorating asset quality and continuing currency mismatch, and potentially more frequent and more damaging natural disasters. The external economic environment could also turn out to be less favorable, if growth in major trading partners was weaker than expected or commodity prices more volatile.

Keywords: foreign exchange bureau; article IV consultation discussion; USD rate; obtaining FX; reference rate; market-clearing exchange rate; Public and publicly-guaranteed external debt; Debt sustainability analysis; Global; Asia and Pacific (search for similar items in EconPapers)
Pages: 110
Date: 2024-11-08
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