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Laos: Govt takes steps to repay debts to local firms
Despite budgetary tensions, the government is working to pay a total of 3.25 trillion kip owed to private companies under the triangle-debt-diversion disbursement initiative.
Addressing the National Assembly yesterday, Deputy Prime Minister and Minister of Finance, Mr Somdy Duangdy, clarified the government’s position regarding the implementation of this initiative. Mr Somdy said several companies had completed the documentation process and paid taxes as required for debt-diversion payment, amounting to over 3.16 trillion kip.
Bonds worth 2.81 trillion kip had been given to these companies, equal to 86.7 percent of the value of the entire plan. Under the scheme, the money owed by the government to private companies that paid for and carried out State investment projects will be transferred to banks. Once the government’s debts are taken over by banks, private companies will no longer be burdened by the high interest rates they owe to banks on the loans they took out.
The move aims to improve the liquidity of the companies concerned so they can pursue their business plans and thereby help to stimulate economic growth.
The Deputy PM highlighted some of the challenges in carrying out the scheme, saying that some banks did not accept government bonds for debt diversion payments while some companies had not paid all of their taxes and completed other documentation.
Many firms had expressed interest in the initiative but failed to meet the requirements set by the government.
To be eligible for repayment under the debt diversion initiative, the projects undertaken by companies must be approved by the National Assembly and construction of the projects must be 100 percent complete.
Another requirement relates to the companies’ property or projects which were used as collateral when applying for a bank loan.
The relevant sectors were told to impose strong measures to ensure the prompt and responsible payment of debts to companies in the near future.
The Ministry of Planning and Investment has been instructed to take an active role in formulating a five-year investment budget plan for government sectors and localities based on the country’s five-year budget plan approved by the National Assembly.
Meanwhile government sectors and localities must follow their five-year investment budget plans as a reference or guideline for infrastructure development in their areas. The Bank of the Lao PDR has been asked to monitor and assess the effectiveness of bank loans in a bid to minimise the number of outstanding loans.
Speaking at the opening ceremony of the fifth ordinary session of the NA’s 8th Legislature on June 5, Prime Minister Thongloun Sisoulith highlighted the government’s determination to repay its debts. The prime minister referred to the challenges in bolstering national revenue so that a larger budget could be allocated for the payment of debts that have accumulated over the years.
Another challenge relates to the payment of debts owed to foreign countries. The amount owed increases annually because the government is required to pay both the interest and the principal to creditor nations.
Source: http://www.vientianetimes.org.la/FreeContent/FreeConten_Govt131.php