Lao gov't proposes to revise key economic targets amid rising inflation

The Lao government has asked the National Assembly to consider and approve some of the key macro-economic targets that were revised for 2022 to stabilize the economy.

Lao central bank governor Sonexay Sitphaxay presented a report to the ongoing National Assembly session on Tuesday, detailing the revised targets to be accomplished by the government by the end of this year.

Under the proposal, the flexibility of the Lao kip/U.S. dollar exchange rate, which is currently allowed to fluctuate within a band of plus or minus 5 percent per year, will be amended to a level that does not create inflation pressures for the government.

The average inflation rate is currently set at a maximum of 5 percent, but will be raised to 12 percent in 2022.

The government has also asked for the M2 amount to be raised from 22 percent to 28 percent in light of the continuing depreciation of the kip.

The changes come as the economy is being hit hard by global economic woes, triggered by the Russia-Ukraine conflict and the COVID-19 pandemic.

Global uncertainty is hindering the government's plans to achieve key targets as outlined in the socio-economic development plan for this year, state-run daily Vientiane Times reported on Wednesday.

Vice President of the National Assembly Sommad Pholsena, on behalf of the National Assembly Standing Committee, said members of parliament would debate the proposal by the government to revise the development targets to reflect changing circumstances.

The year-on-year inflation rate of May in Laos climbed to its highest level in 18 years, with prices rising by 12.8 percent.

Over the past five months of this year, the inflation rate averaged 9 percent, which was well above the figure of 5 percent endorsed by the National Assembly.