The Banking and Financial Sector of Lao PDR : Financial Sector Note

Asian Development Bank ; World Bank

World Bank, Washington, DC

关键词: ACCOUNTING;    ACCOUNTING FRAMEWORK;    ACCOUNTING STANDARDS;    AMOUNT OF LOANS;    ASSET CLASSIFICATION;   

RP-ID  :  93792

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

During the second half of the 1980s, LaoPDR embarked on an ambitious program of economic reforms,called the New Economic Mechanism, whose main purpose was togradually transform its centrally-planned economy into amarket-oriented economy. The initial reform momentum lastedabout one decade. The far-reaching reform programencompassed many critical components including: (a)promotion of private production through improved incentives;(b) institutional infrastructure to improve market economyoperations; (c) the strengthening of Lao comparativeadvantages through trade liberalization and furtherspecialization; and (d) the establishment of price stabilitythrough macroeconomic policy measures. The systemic changesintroduced in Lao PDR have contributed to a significanttransformation of the country s economic system, away from arigorously centrally-planned economy and towards a form ofmarket economy based on private ownership. The percentage ofpoor declined based on the national poverty line from 45 to39 percent between 1992-93 and 1997-982. But the percentageof very poor did not decline and remained at slightly above30 percent evidencing the need for even broader and fastergrowth. Moreover, several factors slowed down the economicliberalization process. Such factors included the lack oftransparency in government-business relations, a weak civilsociety, the position of some interest groups at thenational and provincial levels, and the existence ofnoncompetitive economic structures with a few firms andactors accounting for a large share of domestic production(except in agriculture). In some areas, reform policystagnated and is lagging. This is the case in the financialsector. The creation of a two-tier banking system in theearly 1990s with separate and well-defined functions for thecentral bank and the state-owned commercial banks, has notresulted in the expected benefits: Lao PDR is stillsuffering from chronic macroeconomic instability and thestate-owned commercial banks are suffering from a largeamount of non-performing loans. Taking into considerationthe objective of the Lao leaders to improve the well-beingof the Lao People, this paper argues that there are validreasons for establishing rules that discipline the politicalinfluence on the design and conduct of economic policy, andmore specifically, policy regulating the financial sector.