Laos could face rising debt if it fails to achieve the revenue collection target for fiscal year 2012-13 which ends this month, according to a recent report from the Ministry of Finance.
Revenue collection over the past 11 months has fallen considerably short of the target, attaining only 78.38 percent of the plan for the year, which was set at more than 19,500 billion kip.
The ministry attributes the failure to unfavourable global economic circumstances and an overly-optimistic target, which was 27.15 percent higher than last year's figure.
Last week the ministry held a meeting with the relevant departments in Vientiane to discuss the matter and agree on measures to accelerate revenue collection over the rest of the year.
Speaking at the meeting, Finance Minister Mr Phouphet Khamphounvong said the government had set a high revenue target due to increased expenditure. This was necessitated by the hike in the salaries paid to state officials.
He admitted that it had been hard work to collect the full amount of revenue owed to the government within the set timeframe. This meant it was difficult to make disbursements on time.
According to the report, revenue collected from taxes reached only 79.58 percent of the plan, revenue from tariffs reached only 84.43 percent, that collected from enterprise management amounted to 80.89 percent, while revenue sourced from state asset management was only 80.97 percent of the target.
The ministry admitted that the amount of revenue collected over the past 11 months was far below the target achieved last year, when the amount collected reached 92 percent of the plan.
The report stated that revenue collection was an urgent issue because there was only one month left in which to achieve the target.
The country's debt could rise if revenue collection falls below the target because expenditure cannot be cut, it was noted.
Over the past 11 months, the government spent 3,694 billion kip to balance the budget deficit by using overseas loans and issuing short-term bonds to mobilise funding.
Despite the country's economic growth of more than 8 percent annually, Laos still faces challenges.
It is seeking more funding to drive economic growth and poverty reduction efforts, with the goal of graduating from least developed country status in 2020.
However, global economic changes continue to impact Laos, particularly fluctuating oil prices, the decline in mining product revenue, rising food prices, and natural disasters.
Mr Phouphet said Laos' main income source is the export of natural resources. But in recent months the price of gold and copper, Laos' major export commodities, dropped due to a fall in demand on the world market.
By Times Reporters (Latest Update September 10, 2013)
