Laos Is on the Brink of Bankruptcy

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sigmoid
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Laos Is on the Brink of Bankruptcy

Post by sigmoid »

Laos Is On the Brink of Sovereign Bankruptcy
Debt, wealth inequality, and corruption will keep the country poor.

https://thediplomat.com/2022/06/laos-is ... ankruptcy/

Sad news, but not unexpected...

Some excerpts:
A decade of colossal debt accrual and economic mismanagement by communist authorities in Laos has finally tipped the country towards bankruptcy, with its foreign reserves incapable of meeting its loan obligations without outside help.

Long lines for fuel, rapidly rising food prices, and the inability of households to pay their monthly bills have also led to rare public criticism from around the land-locked country where authorities take a dim view of anyone who disagrees openly with government policies.

It would be too easy to blame China, which accounts for about 47 percent of Laos debt accumulated on the back of major infrastructure project, and its “debt traps,” which have left their mark on countries like Pakistan, Sri Lanka, and Fiji.

Nor is the war in Ukraine or the crushing impact of the COVID-19 pandemic an excuse. The chief reason behind Laos’ economic collapse is the perennial thorn in the side of many Asian countries: corruption.

Prime Minister Phankham Viphavanh has admitted as much, telling the National Assembly this week that embezzlement by executives and staff, combined with poor management, are the main reasons for the chronic losses racked-up by 178 state enterprises.

“Administration of these enterprises typically did not follow a sound business plan. In addition, the recruitment of executives and staff was largely based on nepotism, with these factors being the main reason for deep-seated management failure,” state-run media said, politely.

.................

But the damage is done and the immediate problem is the livelihoods of 7.3 million Laotians who rank among the poorest populations on the planet and have witnessed a significant widening in the wealth gap, prompting more warnings from the Asian Development Bank.

...................

Because of Laos’ strategic position on China’s southern flank, Beijing might break with past practices and agree to a debt restructuring. The alternative is to go cap in hand to the International Monetary Fund (IMF), like Pakistan and Sri Lanka, and ask for a bailout.

An IMF intervention would come with strings attached, and lots of them. Frugal spending policies would be enforced and to some extent Laos’ economic sovereignty would be eroded.

But the greater irony in rescuing Laotians from an incompetent government that rules by force would be the use of what is essentially a U.S.-Western financial institution to pay-off Chinese debts that were incurred despite the warnings, made loud and clear.
CONTRIBUTING AUTHOR: Luke Hunt
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Re: Laos Is on the Brink of Bankruptcy

Post by Yobbo »

The beautiful white Bentley I was following did look a little out of place!
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Re: Laos Is on the Brink of Bankruptcy

Post by Khmu Nation »

The Kip is all over the place, over 20,000 kip to $1 last week, down to 15,000 kip, now back up to 17,000 kip.

Food and drink has jumped in price - by about 30%.
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Re: Laos Is on the Brink of Bankruptcy

Post by atst »

China's belt road going to plan
I'm standing up, so I must be straight.
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Re: Laos Is on the Brink of Bankruptcy

Post by Alex »

Let's start a Go Fund Me. If all of us chip in, we can buy beautiful Laos and make it a better place.
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sigmoid
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Re: Laos Is on the Brink of Bankruptcy

Post by sigmoid »

Khmu Nation wrote: Wed Jun 29, 2022 4:38 pm The Kip is all over the place, over 20,000 kip to $1 last week, down to 15,000 kip, now back up to 17,000 kip.

Food and drink has jumped in price - by about 30%.

The situation sounds serious but how bad is it really?

Are you planning an exit or will you just ride it out?

I experienced Thailand's currency meltdown from 25 to 50 baht to the USD and economic "crisis" without much fuss, but Thailand's economy was/is much more resilient than that of Laos. They got an IMF bailout and kept rolling along however wobbly.

Any on-the-ground updates would be much appreciated. :salut:
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Re: Laos Is on the Brink of Bankruptcy

Post by sigmoid »

Laos Inflation Reaches 22-year High at 23.6 Percent

https://laotiantimes.com/2022/07/04/lao ... 6-percent/
- the inflation rate is the highest since May 2000, with rising oil and consumer prices continuing to hit the pockets of people in Laos.

- the consumer price index has soared well over estimates and beyond the government-set ceiling of 12 percent.

- On 7 June, the Prime Minister formed a special taskforce to address the country’s economic problems and resolve an ongoing fuel crisis.
The government issued a line of credit to fuel importers, allowing them to bring 200 million liters of fuel into the country. This shipment of fuel is expected to last through July and August.

- Meanwhile, the national minimum wage has been raised this month to assist low-income earners amid the rising cost of living.
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Re: Laos Is on the Brink of Bankruptcy

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