Govt proposes spending increase

The government wants to increase government spending to counter rising inflation.
Ministries and other state bodies made the suggestion during a meeting with the National Assembly this week.

National Assembly standing member Mr Ounkeo Outhilath yesterday said it was a reasonable request.

“The state sector is upholding its duty to the nation, so why the request for an increase in expenditure?” he asked.

“The reason is because funding levels used in the past are insufficient. To be able to perform their tasks fully and effectively, they need to increase expenditure.”

The NA wants to increase its expenditure from 5 billion kip to 6.7 billion kip. The Prime Minister's Office requests an increase from 67 billion kip to 87 billion kip for the upcoming fiscal year.

The Ministry of Public Security asked for an increase to 66 billion kip.

The Vientiane Administration Office asked for a total budget of 130 billion kip. Some of this money would be spent on celebrations to mark the 450 th anniversary in 2010 of the transfer of the capital of Laos from Luang Prabang to Vientiane .

Officials from the Ministry of Finance argue that an increase in government expenditure could spark an economic downturn. Finance Ministry Deputy Office Head Paya Paseuth warned there would be financial consequences from increased spending.

“We should not increase national expediture in accordance with our desires,” he said.
“I think we should prioritise work that needs to be done urgently.”

Mr Paya is against increasing national debt as it would affect currency exchange rates and financial stability.

A financial expert, who asked not to be named, says the country already has very high levels of spending.

“We set the national budget without being certain we can meet the revenue targets. But our expenditure is 100 percent certain,” he said.

“If we cannot meet revenue targets we have to find money from other sources, including borrowing from other countries, at the cost of increasing national debt.”

The national revenue in 2006-2007 was more than 4,000 billion kip (about US$424 million) and increased to 5,800 billion kip (about US$667 million) in 2007-2008. The Finance Ministry hopes to generate more than 7,000 billion kip (US$818 million) in 2008-2009.

Mr Paya said some ministries did not report revenue on time and this made it difficult for the Finance Ministry to report accurately to the National Assembly.

According to the law, all expenditure must be approved by the National Assembly.

Some officials have suggested raising taxes on luxury goods, particularly tobacco, to generate additional revenue. They also suggest strengthening fiscal management.