International Monetary Fund Says Laos Economy Stabilizing but Risks Remain

Laos has made progress in stabilizing its economy after a period of high inflation and exchange rate pressure, but significant risks remain, according to the International Monetary Fund (IMF).

In its 2025 Laos report, the IMF noted that tighter monetary and fiscal policies introduced in the second half of 2024 helped stabilize the economy.

Inflation, which peaked above 30 percent in 2023, declined sharply to around 7.7 percent in 2025, while pressure on the Lao kip eased.

Economic growth is expected to remain relatively steady at around 4.5 percent until the end of 2026, supported by electricity exports, a recovery in tourism, and continued foreign direct investment.

Debt Risks Persist

However, the IMF cautioned that Laos remains vulnerable to external shocks due to high external debt, limited foreign reserves, and structural weaknesses in the financial sector.

Public debt remains the country’s most significant economic risk, according to the organization. 

According to IMF data, public debt declined from 112 percent of GDP in 2022 to 80.6 percent in 2025, following debt restructuring, negotiations with creditors, and tighter fiscal policies.

If fiscal discipline and economic reforms continue, the IMF projects public debt could fall further to 57.4 percent of GDP by 2030, down from an estimated 75.7 percent in 2026.

However, the organization cautioned that current debt levels remain well above international sustainability thresholds, meaning Laos could face renewed financial pressure if economic conditions weaken or borrowing rises again.

To reduce these risks, the IMF recommended maintaining strong primary budget surpluses of around 2.5–3 percent of GDP, strengthening tax collection, and adopting a clear medium-term debt management strategy.

The organization also called for greater transparency in public debt data and stronger oversight of state-owned enterprises, particularly in the electricity sector, which carries significant financial liabilities.

source: https://laotiantimes.com/2026/03/06/international-monetary-fund-says-laos-economy-stabilizing-but-risks-remain/