The government has adhered to four main areas of focus to ensure national development is carried out in accordance with determined goals, according to Lao Prime Minister Bouasone Bouphavanh.
The PM made these comments on July 7, at the National Assembly's fifth ordinary session of the sixth legislature in Vientiane .
He was speaking about the implementation of the government's action plan during the 2007-2008 fiscal year and the upcoming tasks for the 2008-2009 fiscal year.
Mr Bouasone said the government had firmly committed to four areas of focus.
Firstly: a commitment to the maintenance of political stability, social peace and security, and the creation of favourable environment for development.
Secondly: committing to development by taking an economic focus. This would involve the active implementation of the Party's economic guideline in order to realise a continual annual growth rate of 7.5 percent or more. This would link closely with social and cultural development, eradication of poverty and the enhancement of social justice.
Thirdly: a commitment to the development of the solidarity of all Lao people and the improvement of governance systems with the aim of promoting better service delivery and preventing corrupt practices.
Fourthly: committing to the expansion of good relationship with all nations and international organisations based on mutual benefit. This is also aimed at ensuring regional and international integration.
Mr Bouasone reported that by committing to the above mentioned areas, the government had achieved successes in development during the two past fiscal years.
During 2005/2006 gross domestic product (GDP) grew by 8.1 percent. In 2006/2007, GDP grew 8 percent and per capita income amounted to US$669, which was higher than the predicted target of US$619.
The industrial sector grew rapidly and the agricultural sector also increased, thanks to the increase in the production of rice and other food products. The service sector grew steadily as a result of the rapid expansion of tourism. At the same time, the value of exports became higher than imports, collected revenue was higher than expected and the average annual rate of inflation was 4.1 percent.
The Prime Minister said there was a different economic environment during the 2007-2008 fiscal year, and this influenced the implementation of the socio-economic development plan and the state budget plan. Oil prices were continually increasing and the value of the US dollar was decreasing.
The prices of rice, other food products and raw materials have also increased gradually. Price fluctuations in these areas have affected the growth and stability of the world economy. Some countries have faced social unrest caused by the rising cost of living.
“Our country cannot not avoid this impact, but the external situation has not yet significantly affected our country,” Mr Bouasone said.
During the first six months of this fiscal year the GDP grew at a rate of 7.9 percent, which is slightly lower than the predicted 8 percent. The service sector grew by 9.9 percent, which exceeded the predicted rate of 7 percent. Average per capita income has reached 7.4 million kip (about US$810 per person), which is higher than the predicted target of 7.2 million kip (aboutUS$728).
The value of the national currency remains stable, foreign monetary reserves have increased and the liquidity of the banking sector has improved.
Trade and tourism have expanded, particularly exports of goods, which have already reached 52 percent of the annual target. The trade deficit and budget deficit remain low, and average inflation during the first six months was 6.26 percent.
Inflation has gradually increased during the past two to three months and reached 10.32 percent in May. The rate of inflation during the first five months of 2008 averaged at 7.58 percent.
Rising inflation is caused by the increasing price of consumer goods, driven by high oil prices. It creates a negative impact on economic growth and contributes to rising living costs.
The government has already adopted various policies to minimise these problems and will continue to do so. The policies will aim to ensure political security and macro-economic stability, prevent any deterioration and maintain peace and safety. They will also attempt to mobilise the potential of economic sectors to boost production of goods and services in order to promote the growth of the economy and realise the targets set in the socio-economic development plan and the budget plan for 2007-2008.
The government acknowledges achievements have been low in relation to the implementation of the five-year socio-economic development plan for 2006-2010.
Mr Bouasone said the growth achieved so far relied mainly on natural resources and labour intensive projects.
Poverty eradication linked to rural development has been progressing at a slow pace, which leads to increasing disparity in income and development between urban and rural areas.
Measures to readjust this gap have not yet been effectively carried out.
Development in the social and cultural fields is still faced with many problems. More attention is needed to educational reform, personnel capacity and skills improvements and the promotion of the national culture.
Mr Bouasone said the government fully acknowledged these shortcomings and would make efforts to resolve the problems gradually. At the same time, it will also try to further strengthen the outcomes achieved during the past two-and-a-half years.
For the 2008/2009 fiscal year, the government will continue to maintain the macro-economic targets at the same level as in 2007/2008.
GDP shall grow by 8 percent. This growth will be achieved sector by sector as follows: agriculture (3.4 percent), industry (1.58 percent) and services (9.9 percent). Average per capita income is predicted to rise to 8.35 million kip, revenue is projected to be 16.4 percent of GDP, budget expenditure shall be 19.7 percent of GDP and the budget deficit will be 3.3 percent of GDP. Exports are predicted to increase and it is hoped foreign exchange rates and inflation will continue at a stable level. Bank deposits and credit will be expanded by at least 38 percent and 26 perc ent respectively.
Mr Bouasone also presented a report on the overall policies and measures in the economic, financial, commercial and investment fields. This included administrative, educational, ideological and psychological measures for promoting continual growth while preventing any increases in inflation.