EU expects to increase aid to Laos despite debt crisis
he European Union will provide more aid to Laos over the next several years despite facing debt and a financial crisis, EU officials said on Monday.
The officials made the announcement at a meeting in Vientiane with Lao senior government officials to discuss the impact of the ongoing European Union debt crisis on socio-economic development in Laos.
The EU is not just a major donor to Laos but also an importer of Lao garment products. The ongoing debt crisis in the eurozone has led to concerns among policy makers and businesspeople about the possible negative impacts it could have on the progress of development in Laos.
According to a presentation by EU officials, the European Union will reduce aid to developing nations so that more assistance can be given to the least developed countries, which will benefit Laos in the coming years.
The European Union has a budget of about 23 billion euros available for financial packages in cooperation with other nations from 2012 to 2020.
In response to concerns over the impact of the EU debt and financial crisis on foreign direct investment and trade in Laos, EU officials said the European Union was not a major foreign investor in Laos so the debt crisis would not lead to a major drop in investment funding in the country.
The largest foreign investors in Laos are Vietnam, China and Thailand, with most investment in the mining and hydropower sectors, according to the Ministry of Planning and Investment. Their data shows that the Lao economy is not reliant on the European Union.
EU officials also said the impact of the financial crisis on Lao exports would be limited, pointing out that most of Laos’ exports to the EU are garment products, which account for a small portion of total export value.
Most garment exports go to European nations that are not involved in the debt crisis. The EU nations most in debt are Ireland, Italy and Portugal, while Germany and France are still financially strong.
EU officials said, however, that while the impact of the debt crisis on Laos was limited, Laos should have concrete measures in place to prevent any possible negative effects, saying that the future was unpredictable.
They advised the Lao government to diversify its economic base and increase the number of its trading partners to ensure sustainable economic development, adding that the crisis was an opportunity for Laos to improve its situation.
EU experts also said the Lao government should maintain a sound macro economic policy and stable exchange rates, as this would create confidence among foreign investors
