Laotian Finance Minister Somdy Douangdy admitted a substantial decline in tax and excise revenues this year as a result of the global financial crisis; therefore, the government would need more foreign aid to balance the budget.

 In his address to the Seventh Session of the National Assembly’s Sixth Legislature, Mr. Somdy said that during the first eight months of the current 2008-2009 budget year,  2,186.9 billion kip in tax and excise revenues have been collected, accounting for 60.41 per cent of, and much lower than, the targeted plan.

Under the current fiscal plan, tax and excise revenues account for 47 percent of the national budget.

The minister said the decline was attributed to the global economic downturn which has caused big drops in Laos’ exports and foreign investments.

He added that revenues collections from taxes and duties levied on forest concession saw the largest drop with only 27.94 billion kips collected, well below the planned target of 100 billion kips.  

Revenues from other sources also dropped, with 1,408.68 billion kips collected from imports and exports taxes, accounting for 62 percent of the target, and 98 billion kips from land leasing or land concessions or 42 per cent of the target.

According to Mr. Somdy, the government had approved a spending budget of more than 10,647 billion kips for the current fiscal year, and so far roughly 6,186.33 billion kips, or 58.1 per cent, have already been spent over the last eight months, creating the need for the government to increase lending from abroad to balance the budget.  

For the current fiscal year, the Lao government had expected to receive no less than 2,307 billion kips in foreign aid and loans. For the past eight months, the international community has provided Laos more than 777 billion kips in grants. For its part, the Lao government has borrowed a total of 936.14 billion kips.