Laos Implements Restrictive Monetary Policies to Control Inflation
The government takes strong measures to stabilize the economy, with inflation projected to drop significantly by year-end.
Laos has adopted stricter monetary policies in a bid to control inflation, with Prime Minister Sonexay Siphandone presenting the updated economic growth forecast at the 8th Ordinary Session of the 9th Legislature of the National Assembly on November 18, 2024. The government’s new measures include tighter monetary controls, enhanced exchange rate management, and steps to regulate foreign currency flows into the banking system. To curb inflation, the government is also exploring price control mechanisms and limiting imports of high-value luxury goods like expensive vehicles.
These efforts have shown promising results, with inflation dropping from an average of 31.23% in 2023 to 24.4% in the first ten months of 2024, and it is expected to fall below 20% by year-end. The government’s actions have also helped stabilize the exchange rate. Additionally, steps to increase foreign exchange reserves are underway, including requiring exporters to transfer their foreign currency earnings to Lao banks. The country's banking system is also growing stronger, with deposits surpassing GDP expectations.
Prime Minister Sonexay highlighted further steps to stabilize the economy, including the establishment of a joint venture between the Bank of the Lao PDR and 11 commercial banks to create a Liquid Foreign Exchange Market. These measures aim to reduce the depreciation of the kip and improve economic growth, especially through targeted credit policies for key sectors such as agriculture, tourism, and industry.
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These efforts have shown promising results, with inflation dropping from an average of 31.23% in 2023 to 24.4% in the first ten months of 2024, and it is expected to fall below 20% by year-end. The government’s actions have also helped stabilize the exchange rate. Additionally, steps to increase foreign exchange reserves are underway, including requiring exporters to transfer their foreign currency earnings to Lao banks. The country's banking system is also growing stronger, with deposits surpassing GDP expectations.
Prime Minister Sonexay highlighted further steps to stabilize the economy, including the establishment of a joint venture between the Bank of the Lao PDR and 11 commercial banks to create a Liquid Foreign Exchange Market. These measures aim to reduce the depreciation of the kip and improve economic growth, especially through targeted credit policies for key sectors such as agriculture, tourism, and industry.
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