The government will accept only priority projects in the fiscal year 2007-2008, to reduce debt and free up funds for key development tasks.

It will give the green light to projects proposed by government sectors or local authorities only if they fall within the scope of the action plan approved by the National Assembly (NA), Prime Minister Bouasone Bouphavanh said on Friday.

Mr Bouasone was reporting on socio-economic and budget plan preparations for the fiscal year 2007-08 last week at the Lao-ITECC in Vientiane .

He said that if any sector went ahead with a project that did not come under the NA's action plan and the Prime Minster's decree No 58, the sector and the authority involved would be punished.

“Investment will be more selective, focusing only on key projects that are relevant to the objectives and goals of the government's plans and strategies,” he said.

I n the near future, the government will shortlist the priority projects and government strategies it intends to pursue, avoiding high-expenditure projects such as building government offices and accommodation for officials.

This is intended to help cut government expenditure over the next fiscal year, according to the prime minister.

He said projects suitable for investment by the private sector would be considered and the government would encourage the private sector to follow the BOT system (build-operate-transfer) by offering low-interest loans and long-term payments. The involvement of the private sector will also help to reduce unnecessary government expenditure.

Currently 111 priority projects from 11 action plans are short listed; these are linked to the country's socio-economic development plan. They will be allocated to the relevant department implementing the action plans.

The government Secretariat will cooperate with the Committee for Planning and Investment to identify projects for which each sector will be directly responsible.

Mr Bouasone advised each sector and local authority to turn their attention to incorporating the action plans to follow the government development programme from 2006-10.

In his report, the prime minister said the national debt had increased this year compared to last, because of accumulated debts from projects run last year that are yet to be paid.

Debt from government investment projects currently totals over 878 billion kip from 923 projects, and is predicted to continue rising.

The government is trying to solve this problem to ensure it will not impact on development in the future.

Mr Bouasone said the main reason for the increased national debt was that the departments had not complied strictly enough with financial planning and regulations.

To reverse this, in 2007-08 each sector will strictly follow the government investment plan approved by the NA. The prime minister advised each sector to focus on priority projects to ensure that funds will be sufficient, and operate the projects to the yearly plan, to ensure they will not generate new debt.

In-depth economic planning and technical analysis will be carried out for each project to ensure it is financially viable and finances can be monitored to avoid corruption.

The government also seeks to improve the macro-economy in 2007-08. Gross Domestic Product (GDP) is targeted to rise 8 percent or 7.28 million kip per person.

The government plans to maintain a stable exchange rate and keep inflation below 6 percent, estimating to collect total revenues of 15.22 percent of GDP while expenditure is predicted to be 20.68 percent of GDP.

By VIENTIANE TIMES
(Latest Update September 10, 2007)