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necessarily reflect the views or policies of the Asian Development Bank Institute
(ADBI), the Asian Development Bank (ADB), its Board of Directors, or the
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use. Terminology used may not necessarily be consistent with ADB official terms.
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April 25, 2019
Presentation Outline
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Capital city: Vientiane Capital
Total area: 236,800 sq Km
Population: 6.8 million (2016)
Currency: Kip
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Lao Economic Development
GDP Growth and GDP per capita
(USD) (%)
3,000 8.2
8.02 8.03 8
2,500 2,408
2,226 7.8
1,949
2,000 7.61 7.6
1,806
1,569 7.4
1,500 7.27
7.2
1,000 7.02 7
6.8
500
6.6
- 6.4
2012 2013 2014 2015 2016
Growth
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Lao Economic Development
(% of GDP) Government Revenue
20.0% 18.9%
18.3% 18.4%
18.0% 17.7% 17.5%
16.4% 2.5% 2.9% 2.7%
15.8% 2.2% 2.6%
16.0% 14.9% 14.9% 1.7%
13.9% 1.9%
14.0% 13.4% 13.1%
12.9% 1.6% 1.9% 1.7%
11.8%
12.0% 2.4% 2.5% 11.5% 11.6% 1.9%
2.1% 2.0% 2.0%
10.0%
8.0% 13.9% 15.8% 16.0% 15.7% 14.9%
13.1% 14.7% 15.5%
6.0% 12.3% 13.0% 6.6% 6.0% 6.5% 6.1%
11.0% 10.6%
9.7% 9.6%
11.0% 5.7% 5.3%
9.5%
4.0% 3.2% 2.8% 2.9%
3.2%
2.3% 2.4%
2.0%
1.4% 1.7% 1.8%
1.1%
0.0%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Budget revenue during the past 10 years (2001-2016) average 16% of GDP. In which, domestic
revenue, average 14% of GDP and ODA average covered 2% of GDP, the State budget execution
has tendency to get better and better, the ratio of domestic revenue compare to GDP increased
from 14% of GDP in FY 2000-2001 to 17.5% of GDP in FY 2015-2016.
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(% of GDP)
Government Overall Balance
35.0%
30.8%
29.1% 28.9%
30.0%
25.6% 25.5%
24.7% 24.4%
25.0%
22.2%
21.1% 20.9% 20.7% 24.2% 24.4% 24.6% 23.7%
19.9% 19.9%
19.1% 22.4% 22.4%
20.0% 18.2%
15.7% 19.3%
17.8% 17.3%
15.0% 16.6% 16.8%
16.0%
14.5% 14.1%
13.3%
12.6%
10.0%
5.0%
0.0% -1.5%
-3.1% -2.3%
-3.1%
-2.0%
-5.0% -3.1% -3.4%
-4.6% -3.8% -4.5%
-5.5% -4.9% -5.2%
-6.3% -6.2%
-6.9%
-10.0%
Revenue Expenditure Overall Balance
GOVERNMENT OVERALL BALANCE
(PLAN VIII)
25.0%
21.5% 21.7% 22.0% 21.2% 20.1%
20.0%
10.0%
5.0%
0.0%
2015/16 2017 2018 (PLAN) 2019 (PLAN) 2020 (PLAN)
-2.8%
-5.0% -4.0%
-5.0% -5.6% -5.4%
-10.0%
Revenue Expenditure Overall Balance
First generation of PFM reform
- Revised legislations
- Centralized treasury, tax and customs
administration
- Fiscal decentralization (Sam-sang)
- PFM assessment:
- PER
- PETS
- PEFA
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Key achievements in first generation of
reforms
Example Treasury Reforms
Closing of bank accounts &
Hundreds of bank accounts on all
consolidation to a single, zero
levels of government
balance account
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Public Finance Development Strategy to 2025 and Vision
to 2030
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Lao PDR and the International Context
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Lao PDR at a glance
Potentials
• Political stability, peace & security
• GDP/capita: US$ 2,408
• Stable macro-economy and
exchange rate
• Abundant natural resources (water Challenges for Lao PDR
• Lao PDR remains in the group of LDC countries
forestry, mineral resources)
• Abundance of natural resources has not been
utilized efficiently
• Inefficient use of public resources and donor aid
• Need to improve government capacity
• Public debt levels remain high 14
PFM challenges over the past 15 years
• Budget Preparation not based on credible data
Revenue and
expenditure • Planning and execution did not strictly follow the Law
management • Fiscal reporting was delayed and incomplete
• off-budget spending
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Public Finance Development Strategy 2025 in
the country’s broader development path
National Socio-
Economic Development
Plan
Guidelines on
Public Finance delegating
Party Guidelines responsibilities to local
Development levels (Sam Sang)
Strategy
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Macro Targets
Annual GDP
growth • at least 7,2% (per year)
3.
• Enhanced efficiency of budget expenditure management and
Expenditure
transparency
policy and
• modern and systematic expenditure management
rational
• Delegation of responsibilities to the local level
spending
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Strategies 4-7
Strategy Goal
6. Strong
• Alignment of public/private accounting systems, audit and reporting to
accounting,
international standards
audit and
• Enhance financial control and anti-corruption measures
financial
• Impose measures for violators of fiscal disciplines
control
7.
• Alignment to regional and global practices
Modernization
• Development and application of technology for revenue collection and
of public
expenditure management
finance entities
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Strategies 8-10
Strategy Goal
Reporting
Monitoring Final
Implementation • Results
Adjustment
• Areas for
improvement
Evaluation
• Recommendations
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Implementation Plan for the Public
Finance Management Reform
Stage 1 Phase II (2018-2020)
6 prioritised programmes
Technical team has suggested
2 implementing phases:
(2018-2020)
organizational structure, personnel and
management tools
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Implementation Plan includes
6 Programmes:
1. Fiscal Policy Improvement
2. Legal Framework Development and
Improvement for Public Finance Sector
3. Revenue Management Reform
4. Expenditure Management Reform
5. Modernization of Public Finance Sector
6. Organizational Structure and Human Resource
Development
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Programme 1: Fiscal Policy Improvement
Research and improve financial policies in all aspects based on
Vision to 2030 and Public Finance Development Strategy to 2025 by
focusing on improving the State budget structure for the right
balance in 2020 (fiscal deficit of not more than 3% of GDP)
Revise revenue policies:
• Revise Tax rate
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Programme 2: Legal Framework Development and
Improvement for Public Finance Sector
Review Tax policies:
Most of the work completed in 2017: value-added tax, consumption
tax, which are being improved and developed into Tax Law and
Consumption Law;
Plan for 2018 is to review Land Tax and Assets Tax policies to move
to the development of Assets Tax Law in 2019.
Will complete 100% the development of secondary legislation
In the Public Finance sector Laws, 65% of secondary legislation was developed and the
remaining of 35% will be developed in FY 2018-2019;
In some Laws, although secondary legislation could not be made,
implementation instructions have been identified in different Categories and
Articles.
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Programme 3: Revenue Management
Reform
Implement Tax Development Plan:
• 4 development plans, 11 priorities
Improve legislation
Improve revenue management collection
Tax modernization
Improve human capacity and Institution
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11 prioritiesed for 2018-2020
1. Review existing legislation and develop new ones
2. Follow Laws, rules
3. Identify Large Tax Payers
4. Expand the implementation of VAT
5. Improve services for Tax payers
6. Improve the usage of technology
7. Improve the current information to be an information centre
based in Tax Department
8. Promote international cooperation
9. Improve internal inspection, transparency and honesty
10.Increase Tax staff capacity and skills
11.Carry out duties based on technicality and organizational
functions of the Tax Department
Implement Tax Development Plan:
– Implement the Compliance Program to prepare for the future
implementation of the Authorized Economic Operator (AEO) project
Budget Reform:
– Develop budget based on State Budget Law revised in 2015, develop medium-
term fiscal framwork, change budget preparation from COA to baseline budgeting,
prepare budget plan in the suggested timeframe and policies;
– Enhance budget allocation by creating mechanisms to consult with local level for
each prioritized task;
– Implement Procurement Law and apply it in the public investment projects,
administrative expenses;
– Develop rules and set up regularly inspection exercise;
– Coordinate with Ministry of Planning and Investment to build payment system
with full information and follow up the implementation of State investment
projects;
– Reseach on technical revenue management for centralized revenue collection and
implement state budget based on the National Assembly approval.
Treasury Reform:
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1. Organizational Structure
Continue improving the Organizational Structure in the Finance sector
to be in line with new development;
Points to be addressed: legislation framework to 2020 will develop
15-16 Laws, Law impact assessment and conflict resolution on Laws
are not available;
Procurement process based on Laws;
Centralized domestic revenue collection;
Sam Sang from District level particularly the Taxation sector;
Security
2. Prepare Job Description and Criteria of each Position
ຂອບໃຈ
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