Government revenue collection has fallen short of the target and left state employees frantically checking their bank balances this month after salary payments were delayed by weeks.
Director General of the Ministry of Finance's Budget Department, Saisamone Xaysoulien, told Vientiane Times the late payment was related to a shortfall in revenue collection.
He also admitted it was difficult to pay employees and deal with other aspects of government expenditure when revenue targets were not met.
The situation is likely to become even more difficult next month because the new fiscal year brings in an almost 40 per cent increase in state employee salaries.
Saisamone said cabinet members, provincial governors and the Vientiane Mayor will meet in the capital next week, when ensuring revenue targets can be met will be a priority topic of discussion.
Government officials say it is necessary to tighten fiscal policies and steps must be taken to penalise those who violate laws and avoid paying their dues.
According to a report from the Ministry of Finance, just 78.38 per cent of the target figure of 19,500 billion Lao kip (US$2.4 billion) was collected in the first 11 months of this fiscal year.
Global economic uncertainty leading to a decline in mining product revenue affected the country's total collection as its income is heavily reliant on the export of natural resources.
The government's revenue collection target this fiscal year was 25.17 per cent higher than last year's and the budget was aiming for a deficit of about 5 per cent of gross domestic product (GDP).
Currently the budget deficit is sitting higher than 5 per cent and economists are warning expenditure must be used wisely to avoid a financial crisis.
Over the past 11 months, the government has used overseas loans and issued short-term bonds to mobilise 3,694 billion Lao kip ($470 million) in an effort to balance the budget deficit.
According to the Ministry of Finance, almost 700 billion Lao kip ($89 million) is spent each month on salaries and supporting allowances for state employees.
Once salaries are raised next month the government will have to find an additional 2,000 billion Lao kip ($254 million) in the 2013-14 fiscal year to pay its employees.
The government has set revenue targets of at least 25,047 billion Lao kip ($3.1 billion) next fiscal year, representing 27.63 percent of GDP.
Budget expenditure has been limited to 29,580 bi llion Lao kip ($3.7 billion) or 32.63 percent of GDP.
