Thailand
Laos: Govt seeks funding boost as budget deficit bites
The government will require 14.23 trillion kip in response to a budget deficit for 2017 after finding that the country will face a revenue shortfall again this year.
The Deputy Prime Minister and Minister of Finance, Mr Somdy Duangdy was speaking at the National Assembly’s Ordinary Session in Vientiane yesterday, describing the government’s plans to boost national revenue.
He said the government plans to mobilise more funding to address the deficit and mitigate budgetary tensions by issuing bonds and borrowing more money from domestic and foreign sources.
The government projected that it could amass revenue of 23.48 trillion kip, equal to 98.1 percent of the annual plan.
Of the total figure, domestic revenue is expected to reach 20.92 trillion kip, equal to 97.5 percent of the annual plan.
In the meantime, budget expenditure is expected to reach 31.5 trillion kip, equal to 97.24 percent of the annual plan.
The budget deficit is expected to be 8,019 billion kip, equal to 6.18 percent of the Gross Domestic Product (GDP), which is about 0.34 percent lower than the figure approved by the National Assembly.
“Apart from the forecasted budget deficit of 8,019 billion kip, we also need to source 6,216 billion kip to repay bonds and loans owed to domestic and foreign countries,” Mr Somdy said.
The Deputy PM said the government would mobilise 9,178 billion kip from foreign sources including 5,600 billion kip (in the form of ODA for projects), 3,200 billion kip (through bonds) and 378 billion (loans) to balance the budget.
The government also plans to mobilise funding from domestic sources, amounting to 5,057 billion kip by issuing bonds on behalf of the State treasury. Economists have said that issuing bonds and borrowing money from abroad could be the only way out of a credit crunch, but this approach should only be adopted in emergencies or for the short-term.
The government needs to consider possible long-term sources of funding to pay down debts and to prevent the country from being dragged into an economic crisis as a result of potential shocks.
The main challenge is that only 10.36 trillion kip was collected in the first six months of this year, representing just 43.29 percent of the annual plan.
The financial sector has been called on to boost revenue collection and plug loopholes which have resulted in financial leaks in the past.
Nevertheless, Mr Somdy committed the government to strive harder and amass the revenue based on the projected figures while putting in place strict measures to ensure budgets are utilised effectively and transparently.
He stressed that the government would enhance its efforts to gather funds due from major sources.
Notably, excises charged on imported fuel and vehicles as well as from the categories related to construction equipment and other goods were a focus.
The Deputy Prime Minister also reiterated the importance of introducing an electronic system to collect taxes from businesses such as restaurants, hotels and shopping centres in major cities.
Source: http://www.vientianetimes.org.la/FreeContent/FreeConten_Govt.html