Laos is negotiating with creditors for more time to settle its external debts, which nearly doubled to $950 million in 2023, up from $507 million in 2022, according to a report by the Lao Ministry of Finance released on June 28. To manage this, Laos deferred $670 million in payments last year, adding to the $1.22 billion already postponed since 2020.

The Lao government is actively seeking to defer existing debts and improve liquidity as it faces mounting financial pressure. The country’s total public debt stands at $13.8 billion, equivalent to 108 percent of its GDP. Of this, $10.5 billion is owed to China. Despite expecting high yearly debt payments of around $1.3 billion from 2024 to 2028, the government plans to reduce the debt-to-GDP ratio by 2025.

Domestic issues compound the problem, with the depreciation of the Lao kip further straining the economy. The World Bank reported that the kip weakened by 31 percent against the US dollar last year, making debt servicing more difficult as 59 percent of the total debt is in US dollars. Although deferring debt to China provided some relief from 2020 to 2023, remaining interest and payments still accounted for 5 percent of GDP in 2023.