Logo of Phnom Penh Post newspaper Phnom Penh Post - Laos’ central bank set to focus on currency, inflation management

Laos’ central bank set to focus on currency, inflation management

Content image - Phnom Penh Post
Bank of the Lao PDR governor Sonexay Sithphaxay said Laos will continue to face challenges in foreign currency management because it is a net importer. Vientiane Times/ANN

Laos’ central bank set to focus on currency, inflation management

Lao's central bank will tackle challenges to ensure the stability of the kip and prevent it weakening further against the Thai baht, and ensure the rate of inflation stays below five per cent.

Responding to questions about currency management from National Assembly members last week, Bank of the Lao PDR governor Sonexay Sithphaxay said Laos will continue to face challenges in foreign currency management because it is a net importer.

“Laos is heavily dependent on imported products, with about 80 to 90 per cent of goods coming from other countries, mainly Thailand. When the Thai baht strengthens in value, we are always at risk of a trade deficit when it comes to payments,” he said.

From 2008 to last year, Laos had a trade deficit of at least $854 million per year, with the value of imports being about $3.700 billion per year. This resulted in the need for bank loans and some contributions were made by depositors, the governor reported.

“Since the beginning of 2019, the fluctuating value of the Thai baht and the US dollar has posed challenges for Laos because we import goods worth $490 million every month, of which goods worth $312 million come from Thailand,” Sonexay said, adding that a huge amount of foreign currency was needed to pay for these imports.

In the past two years, Laos has suffered flooding as well as prolonged dry spells, which has caused significant damage to property, farmland and infrastructure.

This year, outbreaks of African swine flu and other diseases posed additional challenges for the government and the central bank, and there was an increased need for food security.

At the same time, the price of fuel continued to fluctuate and the weakening of the kip against the Thai baht and the US dollar resulted in higher inflation.

“At the start of this year, the inflation rate was 1.5 per cent but had risen to 5.3 per cent in October. Over this 10 month period, the average inflation rate was 2.7 per cent. We expect it to be about three per cent on average over the whole of this year,” Sonexay said.

He reaffirmed that the central bank would continue to implement its existing policy on currency management and would stabilise the interest rates imposed by commercial banks.

The ongoing National Assembly session is scheduled to end on December 6.

VIENTIANE TIMES/ASIA NEWS NETWORK

MOST VIEWED

  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Takeo hand-woven silk items provide local high-quality alternative to imports

    After graduating from university and beginning her career as a civil servant at the the Ministry of Economy and Finance, Khieu Sina found time to establish a business that aligns with her true passion – quality hand-woven Khmer goods. Her product line, known as Banteay Srei,

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,

  • 11th Chaktomuk Short Film Festival draws to close

    Cambodia's 11th Chaktomuk Short Film Festival wrapped up successfully on November 28 after a four-day run, with the film “Voice of the Night” awarded top prize for 2022. Sum Sithen, the organiser of the short film festival, told The Post that the number of attendees to the