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Floods add to fears of rising inflation
The Lao government is facing increasing pressure to address rising inflation following the devastating floods last month, according to a senior economist.
Lao National Economic Research Institution Acting Director General, Dr Leeber Leebuapao said yesterday the floods not only destroyed agricultural production bases across the country but also public roads, making supplying goods to markets more difficult.
“The shortage in the supply of goods is adding to upward pressure on inflation in the country,” he told Vientiane Times .
According to the latest reports from provincial authorities, the recent tropical storm Haima caused major flooding in Xayaboury, Xieng Khuang, Borikhamxay and Vientiane provinces, damaging large areas of agricultural land, public roads and other infrastructure. The total cost of damage is estimated to be above 500 billion kip.
Dr Leeber said all state agencies should increase cooperation and work as one to reduce the inflation rate.
The fight against the pricing crisis is no longer the responsibility of the Ministry of Industry and Commerce, Ministry of Finance and the Bank of the Lao PDR but now also extends to the Ministry of Public Works and Transport and the Ministry of Agriculture and Forestry, he said.
He also said one urgent priority for the government is to repair damaged irrigation systems and other essential infrastructure, as well as to provide assistance to farmers to enable them to replant rice and other cash crops to ensure a sufficient supply of food in the market.
The government plans to maintain a stockpile of certain goods to ensure steady supply during the wet season, a time when the difficulty in transporting goods between urban and rural areas often results in shortages and price spikes, he said.
According to the latest Consumer Price Index (CPI) figures from the National Statistics Bureau, the inflation rate reached 9.76 percent in May, higher than the projected GDP growth rate of around eight percent for this fiscal year.
The main driving forces of inflation are increasing prices of food and non-alcoholic beverages, which rose by 14.7 percent in May, while transport and communication costs rose 10.91 percent after a spike in world oil prices.
Dr Leeber said that the involved sectors should increase efforts to curb rising inflation otherwise the country will face an economic downturn in the future.
He said that if inflation continues to rise in Laos it would lead to increased production costs and prices would jump, making many goods unaffordable for most consumers. He added that high prices mean consumers stop buying goods and businesses then suffer, thus slowing economic growth.
The Bank of the Lao PDR has pledged to maintain money growth at an appropriate level while encouraging commercial banks to provide loans at attractive interest rates to boost production activities and ensure sufficient supply of goods in the upcoming months.
vientiane times
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