Laotian Prime Minister Sonexay Siphandone has instructed the government to impose foreign currency controls to support Laos's national currency, the kip, through record inflation, local media reported on Wednesday
MOSCOW (Pakistan Point News / Sputnik - 20th July, 2023) Laotian Prime Minister Sonexay Siphandone has instructed the government to impose foreign currency controls to support Laos's national currency, the kip, through record inflation, local media reported on Wednesday.
At the beginning 2023, inflation hit 40.3% year-on-year in Laos, the highest level since 2000. Laos's national debt reached $17 billion at the end of 2021, which is about 100% of the country's GDP, and it continues to grow.
The measures ordered by Siphandone are aimed at dedollarization and creating demand for the kip, the Vientiane Times newspaper reported, adding that the move comes amid the damage done to Laos's economy by soaring inflation and high public debt, which were mainly caused by the depreciation of the kip.
The Bank of Laos was instructed to control the use of foreign currencies in special economic zones, while the Laotian Ministry of Industry and Commerce had to ensure that the trade in transportation vehicles and precious metals as well as in consulting services was made in kips, digitally, the report said.�
The prime minister also reportedly ordered that payments be made in kips for land and housing, transportation, construction, educational, medical and other services, as well as hotels, restaurants and other goods and services that often accept payments in foreign currencies.
According to a report by Laos's statistics office, key reasons spurring inflation include rising prices for fuel, gas and other imported goods and the depreciation of the kip. Prices for communication and transport services in the country increased by 49.9% last year, while prices for food and soft drinks grew by 47.1%, and prices for medical services and drugs grew by 42%.