‘Focus on sustainable growth to boost ‘fragile’ economy’

International Monetary Fund Managing Director Christine Lagarde (L) meets with Laos President Choummaly Sayasone (R) on March 15, 2016.  / AFP / IMF / Stephen Jaffe

Bangkok / AFP

Communist-ruled Laos must deepen reforms to maintain its rapid expansion, the IMF chief, Christine Lagarde said on Tuesday at the end of a rare visit to one of the world’s fastest growing economies.
Resource-rich Laos has an annual growth rate of around 7.4 percent, but gains have not been evenly distributed and poverty remains widespread among its 6.8 million people, the majority of whom work in agriculture.
Much of the boom has been driven by huge foreign investment since Communist authorities began a very slight opening up of the economy.
China in particular has led that investment, capitalising on the landlocked country’s mineral, forestry and water resources.
In a statement issued after her visit, the head of the International Monetary Fund Christine Lagarde stressed the need to focus on sustainable growth and bolster the country’s fragile economy against shifts in the global market.
“Economic prospects for Lao PDR remain favourable,” she said, referring to the People’s Democratic Republic.
“However, to safeguard macroeconomic stability during the transition out of low-income country status in the medium-term, it will be important to strengthen the economy’s resilience to external shocks and put in place the conditions for sustainable growth.”
Lagarde said key reforms should involve investing in education and raising living standards, crafting a more efficient public administration, accumulating international reserves and developing the financial system.
The IMF head also urged the country’s notoriously opaque leaders to put out “better quality and timely statistics”.
Laos is tightly-controlled by its Communist leaders, who have barred a free press, clamped down on dissent and rarely disclose how their policies are crafted or implemented. Corruption is also widespread.
The country has approached free trade and other liberal reforms much more cautiously than neighbouring Vietnam, a fellow Communist state that is far wealthier.
Many economists say recent growth in Laos has had much less of an impact on poverty reduction than in neighbouring Cambodia and Vietnam.

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