Chinese banks have expressed interest in providing large loans to Laos to develop the country over the next five years, a top government official has said.
Speaking at the annual conference of the industry and commerce sector in Vientiane last week, Deputy Prime Minister Somsavat Lengsavad said he had received a letter from the stating the bank was ready to offer Laos a loan of US$3 billion.
The letter followed on from a visit by President Choummaly Sayasone to China in September.
“The bank wants us to design investment projects before issuing the loan,” said Mr Somsavat, who is in charge of economic affairs.
He said central and provincial policy makers should start to identify potential investment and development projects because the Chinese bank wants to start sending the money this month. The projects proposed must be beneficial for short and long term development.
Mr Somsavat said the Exim Bank of China has also expressed interest in providing loans for development purposes, and were discussing with the sectors concerned the amount of money to be offered.
The banks’ offer was based on their confidence in Laos’ political stability and stable economic growth, he said.
Laos has experienced average economic growth of about 7.5 percent over the past five years, with hydropower and mining the driving forces. The government expects GDP growth to exceed eight percent this fiscal year.
Mr Somsavat said the government needs investment funding of about 127 trillion kip (US$15 billion) to secure GDP growth of above 8 percent over the next five years, adding that the offers from China had eased the government’s concerns about funding sources.
Under the National Socio-Economic Development Plan for 2011/2012, Laos will have to source investment funding of 23 trillion kip (about US$2.8 billion) to reach GDP growth of 8.3 percent this fiscal year.
The annual development plan, which has been in effect since the beginning of this month, shows that the government plans to contribute 9.4 percent of this amount (2.2 trillion kip).
It is expected that international development partners will contribute 24.5 percent (5.7 trillion kip) as Official Development Assistance while local and international private investors and banks are expected to provide 53.2 percent (12.4 trillion kip) and 12.9 percent (3 trillion kip) respectively.
