Laos faces budget problems as revenue collection may fall short
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Revenue collection in Laos may fall short of the target again in the 2013-14 fiscal year, which will intensify budgetary tensions as the government tries to meet its expenditure plans and fund state investment projects.
The government has gained approval from the National Assembly (NA) to collect revenues amounting to a total of 25,261 billion kip (Bt100.44 billion) in 2013-14 with plans to spend 29,745 billion kip this fiscal year.
Finance Minister Dr Lien Thikeo spoke at the NA session in Vientiane on Tuesday in relation to the implementation of the state budget plan for the past eight months before forecasting the figure for the whole year.
The minister said revenue collection over the past eight months of 2013-14 reached only 13,338 billion kip, which was equal to only 52.9 per cent of the yearly plan.
Domestic revenue in the first eight months the fiscal year totalled 10,578 billion kip, which was equivalent to 52 per cent of the yearly plan.
Meanwhile, revenue from grant aid over the same period totalled some 2,759 billion kip, equal to 55 per cent of the yearly plan.
The minister projected that domestic revenue collection would only reach 90 per cent of the yearly plan for 2013-14 despite the government setting up a committee to push for better revenue collection, particularly in major provinces.
He explained that the problems that resulted in the currently budgetary tensions was that the upper limit of the expenditure plan is higher than the domestic capacity to collect revenue to meet such expenditure.
The Finance Ministry said there were many factors that contributed to its failure to achieve the revenue collection target so far this fiscal year.
One of the major causes was that the Finance Ministry has no concrete measures to ensure business people and enterprises were paying taxes in accordance with the law and therefore it was urgent to ensure concrete measures are put in place to deal with budget deficits.
Dr Lien said his ministry would immediately improve management mechanisms and push for all sectors in the society to follow their obligations by paying taxes based on the country’s laws.
Meanwhile, the government will stop or suspend expenditures on unnecessary or non-urgent projects to keep the upper limit of expenditure in line with the government’s capabilities in terms of revenue collection.
Over the past eight months of the 2013-14 fiscal year, the government’s expenditure had reached 13,463 billion kip, which was equal to 45.26 per cent of the yearly plan and lower than anticipated.
The delay in meeting expenditure targets was due to the shortfall in revenue, intensifying the government’s difficulties in relation to financial liquidity and posing challenges when it comes to securing funds for its expenditure plan.
Last fiscal year, the government also faced a revenue shortfall, which forced the government to halt the monthly allowance of 760,000 kip granted to state employees.
The revenue shortfall has also forced the government to stall many development projects to avoid a fiscal crisis.
