Japan experts help Laos with fiscal stability

A team led by Japanese experts has put together proposals for Laos on how to improve its fiscal stability. Laos faces debt problems due to heavy borrowing from China.

The team, consisting of the Japan International Cooperation Agency and Laos' National Economic Research Institute, submitted the proposals to the country's deputy prime minister on Tuesday.

They stress the need to make major infrastructure projects profitable and to scrap money-losing state-run companies.

Laos' fiscal deficits are mounting as it relies on massive loans from China to finance its infrastructure projects, such as railway construction.

China has asked Laos to hand over the rights to operate major infrastructure as collateral.

The proposals point out that Laos depends on foreign currency borrowing and advises it to shift to longer-term loans while maintaining confidence among investors.

Professor Toshiro Nishizawa, a team member from the Graduate School of Public Policy of the University of Tokyo, said Laos was overly optimistic when it procured the loans.

He said it's necessary to think about how ongoing infrastructure projects can contribute to economic development.

The Japan side plans to provide further support on policy making.