Lao Prime Minister Sonexay Siphandone said that the government would not allow the country to default on its debts and pledged to stabilize currency exchange rates, work harder to curb inflation, and regulate prices of products on sale at local markets.

Sonexay highlighted the economic and financial challenges facing Laos and outlined the key measures put in place to tackle them at the fifth ordinary session of the National Assembly, reports Xinhua news agency.

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Sonexay said both external and internal factors were affecting the economy, particularly military conflict, economic sanctions and the fuel crisis, which had resulted in a global economic slowdown, spiraling food prices and skyrocketing inflation around the world.

The rising price of fuel and high public debt ramped up pressure on Laos to source more foreign currency, especially the Thai baht and US dollar, in order to buy imports amid the declining amount of foreign currency provided by loans and foreign investment.

Sonexay said Laos was vulnerable to external impacts and, although a trade surplus of $1.3 billion was recorded in 2022, illegal imports of goods at traditional and local border crossings remained a great concern.

Over the rest of 2023, the government will modernize the revenue collection system and create new revenue streams so that more income is amassed for the payment of debts.

The Prime Minister said the government will strive to plug gaps that result in financial leakages while also preventing extravagance in budget expenditure and pursuing a policy of austerity.

He said the government will make more foreign currency available for fuel-importing companies, modernize foreign currency trading services, regulate import and export financial transaction systems, open more foreign exchange units, and place controls on groups that manipulate foreign currencies.

In addition, the government will continue to improve the investment climate and ensure faster approval of proposed development projects while pushing for continued progress in ongoing mega projects to boost growth.

The government also pledged to carry out more reforms among state-owned enterprises and promote the production of goods for domestic consumption and export.

National Assembly President Xaysomphone Phomvihane highlighted how economic challenges have affected Lao people’s living standards and urged National Assembly members to exercise their right to debate policies and help the country overcome the current challenges.