Draft:Laos and the World Bank
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Laos and the World Bank
[edit]As of April 2024, the World Bank has 28 ongoing projects in Laos, with a total funding value of $938 million (USD). Majority of the projects (23) and funding ($883 million) is financed by the International Development Association (IDA), the agency within the World Bank that offers highly concessional rates to poorer developing countries. The World Bank also states that the International Finance Corporation (IFC), an agency dedicated to private sector projects, is active in Laos, working "mainly in the power, banking, manufacturing, and service sectors." Five policy areas are targeted by the World Bank for reform, including raising public revenue, improving expenditure efficiency, restructuring public debt, strengthening financial sector stability, and improving exports and business environments. The World Bank Country Manager for Laos is Alex Kramer.
World Bank projects in Laos resulting from COVID-19 impacts include the 2020 COVID-19 Response Project and the 2018 Competitiveness and Trade Project, which aimed to vaccinate the population, mitigating the spread of disease, and help businesses recover from the economic effects of the pandemic, respectively. Other projects in Laos include the 2003 Scaling-Up Participatory Sustainable Forest Management Project, which strengthened relationships between forest villages and local governments, the 2019 Reducing Rural Poverty and Malnutrition Project, and
Effects of Economic Reform
[edit]As a part of their initiative to raise public revenue for education, health, and social protection, the World Bank asked Laos to "increase taxes on cigarettes and alcohol as part of efforts to address high inflation and currency depreciation." According to Radio Free Asia, Laos has accrued $18.7 billion since the end of 2022, which has "destabilized the country's macroeconomy and slowed economic growth." Most of the investors in Laos are from China and Vietnam, with over half of the national debt owed to China. The World Bank has predicted that service payments as a result of rising debt could be as much as 39% GDP, as the Lao Kip has depreciated 21% against the US dollar and 29% against the Thai baht last year, caused by a shortage of foreign currency to pay back the debt. In an interview with an official from the Bank of the Lao PDR, Radio Free Asia reports that the control of exchange rates and law enforcement on foreign currency management has failed. In December the Lao Ministry of Industry and Trade required all imports and exports to be registered with the government and conduct transactions solely through Lao banks, which may be causing business people in Laos to turn to the black market for foreign currency.