According to data from the Lao Ministry of Finance, as of 2023, the total amount of public debt and publicly guaranteed debt in Laos has reachedone hundred and thirty-eightBillion US dollars, accounting for 108% of its gross domestic product. Among them, Laos' total external debt is about 10.5 billion US dollars, and China, as Laos' largest creditor country, holds about half of Laos' total external debtfifty-two point fiveUSD100mn

The reason why Laos has a large amount of debt and external debt is mainly due to the combined effects of various factors such as its economic structure, industrial development needs, economic development strategies, international economic environment, and debt management and risk prevention.

Laos, a landlocked country in the north of Indochina Peninsula, borders China to the north, Cambodia to the south, Vietnam to the east, Myanmar to the northwest, and Thailand to the southwest. Populationseven hundredMore than ten thousand. Laos is a country primarily focused on agriculture, with 62.4% of the population engaged in agriculture. Rice cultivation is the main agricultural activity in Laos, but its production efficiency and technological level are relatively low. The industrial foundation is weak and the development is relatively lagging behind.

Therefore, Laos has a single industrial structure and a relatively fragile industrial foundation. In order to promote economic diversification and modernization, the government has implemented a series of economic policies and vigorously developed infrastructure construction and industrialization processes. Improving domestic infrastructure such as transportation and energy requires significant investment in construction. Due to its limited financial capacity, it can only meet these funding needs through borrowing. In fact, most of Laos' borrowings from China are used for the infrastructure of China Laos "the Belt and Road" project. For example, the Lao government has loaned a full amount of US $7 billion to China to build the China Laos railway connecting the China Laos border and Vientiane, the capital of Laos. This railway is regarded as China“The Belt and Road Initiative”An important project that advocates strategic alignment with Laos. These projects not only contribute to Laos' economic and social development, but also deepen its connectivity with neighboring countries.

China Laos Railway

Secondly, the unreasonable debt structure and high debt costs in Laos' debt management have exacerbated its debt burden and increased its default risk. How to plan and arrange debt repayment plans reasonably, ensuring that the scale of debt is commensurate with the level of economic development, is an important issue that the Laotian government needs to address.

In addition, changes in the global economic situation have also had an impact on Laos' debt situation. The fluctuations in the global financial market have led to an increase in financing costs for Laos, as well as increased risks such as exchange rates and interest rates, which have an impact on Laos' debt repayment ability.

Recently, Laos is facing enormous debt pressure. Due to the large scale of debt and the possibility that economic growth may not keep up with the pace of debt growth, international financial institutions and credit rating agencies have warned that Laos faces high default risks. This will not only affect Laos' international reputation, but may also trigger a chain reaction, such as capital outflows, rising financing costs, etc., further exacerbating its economic difficulties. At the same time, the high debt burden has also limited the Lao government's investment in public services and infrastructure construction, affecting the development of key areas such as education, healthcare, and transportation. In addition, in order to repay debts, the government needs to cut spending or increase taxes, which will further compress the living space and consumption ability of the people.

Lao Prime Minister Song Sai meets with Wang Yi, member of the Political Bureau of the Communist Party of China Central Committee and Minister of Foreign Affairs, in Vientiane

Therefore, the Laotian government urgently hopes to negotiate with various creditor countries to delay debt repayment and avoid serious consequences of default. The spokesperson of the Chinese Ministry of Foreign Affairs stated that the Chinese government has carried out cooperation with developing countries, including Laos“Mutually beneficial cooperation"We strongly support the economic and social development of these countries. At the same time, China has been making every effort to help relevant countries alleviate their debt burden.

The Laotian government is also actively exploring new ways of economic development, actively participating in regional cooperation, establishing economic and trade relations with neighboring countries, and expanding markets and funding sources. Promote economic growth through measures such as attracting foreign investment, strengthening infrastructure construction, and promoting tourism development. With the government's attraction of foreign investment and the strengthening of infrastructure construction, the industrial sector in Laos is expected to further develop. The position of the service industry in the Laotian economy is gradually increasing, especially in the tourism service industry. With the opening of the China Laos railway and the development of tourism, Laos' service industry is expected to become a new engine of economic growth.