Foreign currency mismanagement is rampant in Laos, says its new Bank Governor

VIENTIANE, July 2: The new governor of Bank of Laos, Bounleua ​​Sinxayvoravong, addressed the National Assembly on the challenges and difficulties faced by the nation in foreign exchange management, reports Laotian time.

During the 3rd Ordinary Session of the Ninth National Assembly, Bounleua ​​said that sources of foreign exchange have drastically diminished as the amount of foreign currency in the country is unable to meet demand.

Meanwhile, mismanagement of foreign currencies is commonplace, with large amounts disappearing or not entering the system.

Bounleua ​​said that between 2016 and 2020, exports earned the country around $26.44 billion, however, the amount of foreign currency received through the banking system was only $5.76 billion.

“From the beginning of 2021 to the first quarter of this year, Laos should have received $9.81 billion, but only 32% of this sum entered our country’s banking system,” he told AFP. National Assembly.

Mining exports should have brought in more than $2 billion but only $1.35 billion entered the system, according to the central bank governor.

A similar problem was seen with electricity exports, where $2.58 billion should have been received, and less than $1 billion could be accounted for.

Talking about other major issues affecting foreign exchange reserves, Bounleua ​​said the management of foreign direct investment (FDI) was also poorly implemented and unsustainable, while the debt-to-equity ratio had increased.

He said individuals were also using foreign currencies indiscriminately, especially in special economic zones and border areas, while unlicensed exchange service providers were also a big problem.

External debt is on the rise, according to Bounleua, with foreign currency payments putting pressure on the country’s limited foreign exchange reserves and affecting the country’s macroeconomic viability.

A revised law on foreign exchange management is in preparation, having been proposed during the current session of the National Assembly. – Lao time