The Bank of the Lao PDR (BOL) is gathering information on commercial banks as it expects to allocate credit for small and medium-sized enterprises (SMEs).
Twelve commercial banks involved in the government’s SME promotion project will receive loans totalling $300 million from the China Development Bank (CDB).
Governor of the Bank of the Lao PDR Sonexay Sithphaxay last week reported to the annual meeting of the planning and finance sector on the funding process and distribution of the loan to participating banks.
The $300 million loan from the China Development Bank will be delivered to the banks for use by SMEs in three phases, with each comprising $100 million.
“We are collecting information about the readiness of the banks involved in the initiative on SME funding before submitting a request to the CDB for the withdrawal of the first tranche of $100 million at the end of this year,” Sonexay said.
It is hoped that the $300 million provided by the CDB will enhance the ability of Lao banks to finance SMEs.
During the annual meeting, the central bank highlighted its achievements in the first 11 months of this year, noting that overall deposits exceeded 90,000 billion kip in the banking system nationwide.
This was a 13 per cent increase in total deposits compared to last year, equal to 55 per cent of GDP, while the goal set was 59.8 per cent.
“This is a clear consequence of the economic downturn, meaning that members of the public or depositors are unable to deal with proper savings or deposit money in banks,” Sonexay said.
He reported that 79,000 billion kip out of 90,000 billion kip was loaned to borrowers, comprising about 80 per cent of total deposits.
Sonexay said banks had worked hard to minimise burdens and provide borrowers with access to finance, but that in some cases loan applicants were unable to meet banks’ lending criteria.
In 2020, BOL as the nation’s central bank will continue to partner with various sectors to roll out important policies related to the management of foreign currencies, debt, and exchange rates, and other issues.
The annual meeting of the planning and finance sectors was co-chaired by Deputy Prime Minister and Minister of Planning and Investment, Sonexay Siphandone, and Deputy Prime Minister and Minister of Finance, Somdy Duangdy.
VIENTIANE TIMES/ASIA NEWS NETWORK