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Statement by Laos to the 24th Session of the Governing Council

H.E Mr. the President of IFAD,
Distinguished Governors,
Ladies and Gentlemen,

I have the honor and great pleasure of being invited to participate in this 24th Session of the Governing Council of IFAD. First of all, I, on behalf of the Government of LAO PDR, would like to express our heartfelt congratulation to the President and all staff involved in these excellent arrangements and organizing of this Session. I would like also to thank the host country for very warm hospitality offered to our delegation this time.

Mr. President,

The Loa People’s Democratic Republic has been one of the Nations in Asia, who has been impacted from the Financial and Economic Crisis since the last three years. However, our country has been developed gradually, with our all efforts, in slow rhythm, because of the basically economic foundation of our country is in very pioneer period and least developed conditions. Therefore, our country could not be avoided from impact of the financial crisis and it has been caused by very high inflation rate, that we have never faced with before and devaluation of Lao Kip was worsened more than two times.

But, in order to recover these difficulties, the Government of Lao PDR has undertaken the concentration of all efforts and many measures, such as Fiscal Budgeting and Foreign Currency Regulations, Deduction of Trade Balance Deficit Rate by the means of Export Lifting-Up and Largely Open for Free Trade. The firstly started results have been achieved: the inflation rate declined from 140.2% in August, 1999, to 10% at the end of 2000; the value of Lao Kip is strengthened and more stable up to date. In the year of 2000, the economic growth was 6.7%.

However, we are still aware of that the stability achieved is not so solid enough. Means of national production and exploration of potentials of the nation are not strong enough and many problems remain in the environment of Lao economy and that our Government has to have efforts to solve. The Fiscal Budgeting and Foreign Currency Policy Regulations need to be continued, taking into consideration all factors involved. For the Fiscal Year 2000-2001, the earnings effort is expected at 13% of GDP, including 1% carried over from last year; improvement of efficiency of the state expenditures; budget deficit is expected to be kept at 8% of GDP (1% lesser than last year); and public investment in important sectors will be kept at 12% of GDP. In light of budgeting, we will continue the method of "No Advance made from the Banks to balance the Budget of the Nation", but Mobilization of Savings from the people is being promoted in terms of Issuing Medium –Term Bonds.

Foreign Currency Policy Regulations will be continued to keep the inflation rate at 10% (average rate in the FY 2000-2001) and the Foreign Exchange Rate will be secured based on market supply and demand. The Bank of Lao PDR has an special attention to control the increased volume of foreign currency in circulation by means of managing Lending and Mobilizing Foreign Currency in Surplus in the society to the financial system, in such a way of Issuing Bonds of Shorter Term and adjustment of Interest Rate in accordance with the reduction of Inflation Rate. The stable Exchange Rate and reduction of Inflation Rate will improve the confidence to our Macro-Economic Management, especially, from National Investors, as well as Foreign Investors.

For the Foreign Trade and Economic Cooperation with Foreign Countries, our Government has opened widely to introduce to and attract foreign investment to invest in the Productive Activities/Business in order to substitute import, to promote export with focus on improvement of quality and to build up wide and stable partnerships, and special focus on the potentials of our country.

Mr. President,

Might be, I would like to express a cordial greeting to all delegates here, who, during the past and difficult years, have been the very efficient partners and supporters of our country, Lao PDR, the Least Developed Country.

The IFAD Mandate and Strategy have been coincided with our common goal, objectives and benefits.

Since 1979, 7 IFAD Loans have been released to our Government with total amount of 25.867 Million SDR (Net), of which 4 projects were completed and 3 are on-going projects. All projects have been concentrated in remote and poorest areas of our mountainous country in order to help the poor women and men and their children, especially, the ethnic minorities, to combat Hunger and Poverty and to get more benefits for sustainable food security for livelihoods.

The three IFAD financed on-going projects in Lao PDR are allocated in remote and poor areas (in 3 Provinces) of the northern part of the country with very difficult socio - economic and physical conditions. Most of the projects have an overall positive impact on increased food and income security and poverty alleviation of the targeted population in the project areas. Through the project interventions, IFAD has played very important and innovative role in areas of targeting project interventions to the poor of the mid and upland ethnic minorities, introducing cost recovery arrangements for small scale irrigation schemes, mobilizing beneficiary contribution for construction works with full responsibility for operation and maintenance of the investments of direct benefit to the beneficiaries and participatory development in project design and implementation.

However, might be, in order to minimize any risks of wastage and inefficiency, I would like to take this opportunity to emphasize an importance of the efficient Project Formulation and Appraisal, down to Log-Frame and so called Annual Work Plan and Budget, as of tools and techniques of the project implementation within the project life, in order to manage development resources, as a condition of good governance and responsibility to reach our common objectives and benefits: Hunger Eradication and Poverty Alleviation.

Now, more and more participation of our beneficiaries in the project planning and implementation and the use of goods and services may prove the best and secure way of enhancing transparency, especially, in the decentralization process going-on in our country. The so called participatory and demand driven manner will be being applied. This also allows the beneficiaries to undertake self-monitoring and participatory impact assessment of the resources and their use, and provides the most assurance for the most effective assurance for achieving our common objectives and benefits. Therefore, the IFAD financed projects in Lao PDR require more flexibility in the implementation process to quickly adjust and adapt to activities to the changing needs and conditions of our poor beneficiaries. And then, the IFAD financed projects should also be more flexible in their allocation of funds and resources in order to respond rapidly and successfully to change.

How can we improve the project execution better?

In the future, the Government of LAO PDR and IFAD will undertake more regular policy dialogues on issue related to poverty alleviation strategy, decentralization and deconcentration of responsibilities of planning, financing and implementation of development programmes, agricultural and rural development and targeted assistance to the mid and upland poor population in the rural areas.

Mr. President,

"To eradicate Hunger and to alleviate Poverty" is the great challenge for us and we still need synergy and complementarity from other development partners here for future collaboration. And so, we can get to know each other better and build up partnerships to enable us to work together in the future.

Thank you

Statement by the Head of Delegation of LAO PDR
H.E Mr. YAO PHONEVANTHA
Vice Minister of Finance, Lao PRD