Laos Hopes to Improve Development Status

Laos Hopes to Improve Development Status

Laos is one of 47 nations on the list of United Nations’ Least Developed Countries.

The Southeast Asian country is hoping to move up from the list in the coming year. But experts fear the coronavirus health crisis and increasing debt to China may prevent Laos from reaching its goal.

The United Nations’ Least Developed Countries, or LDC, are low-income countries which are at risk for economic and environmental shock. These countries receive additional international aid and trade support. Every three years, a U.N. committee reviews the countries’ progress to decide their position on the list.

In February, the committee will meet to decide if Laos is ready to move up, or graduate. The move will shrink international aid and trade support. But it will bring more foreign investment and low-interest loans to the country. This could help Laos grow economically.

Laos has made graduation from the list an important policy goal for years. In 2018, the country met two of the three measures of progress: higher income for its people and increase in health, education and the ability to read in its population. It failed to meet the third measure, risk of shocks to the economy.

FILE - A view of the Mekong river bordering Thailand and Laos is seen from the Thai side in Nong Khai, Thailand, October 29, 2019. (REUTERS/Soe Zeya Tun/File Photo)

The unknowns

Experts who follow Laos closely told VOA that Laos is likely to meet the same two measures at its second review this coming February. If it does, Laos could move up from its Least Developed Country position by 2024.

There is a risk Laos will not pass the third measure of progress. The country has not invested much in its workers and it depends on only a few industries.

Matthew Johnson-Idan is a high-level U.N. economist in Laos. He said, “Based purely on those three criteria I’d say it’s very likely that Laos will be above the line on at least two if not all three of the criteria.” There are, however, other things the study will consider, such as the effect of the coronavirus health crisis in the country.

The committee will only review information up to 2019, before COVID-19. However, the committee will also look at the health crisis’ social and economic effects on Laos.

COVID-19 has officially infected only 24 people in Laos and killed none. But the lockdowns at home and other countries have hit Laos’ economy hard. The World Bank estimates that Laos' gross domestic product (GDP) growth rate will drop from an average of about 7 percent over the past 10 years to 1 percent or less in 2020.

FILE - A Lao worker rests near to the Nam Theun 2 power dam's powerhouse under construction 28 June 2007 in Laos' Nakai plateau.

High debt

Among other considerations are the nation’s debt and relations to its neighbors.

A small country of 7.2 million people, Laos is surrounded by China, Vietnam and Thailand. It has been dependent on trade with its neighbors, three of the strongest economies in Asia.

The World Bank estimates that Laos' debt could climb to 68 percent of its gross domestic product this year, most of it owed to China for several large building projects. In August, the U.S. ratings agency Moody's warned that Laos might not be able to pay its debts "in the near term."

Imogen Page-Jarrett is with the research firm Economist Intelligence Unit. She said, "If they're using just the traditional three criteria then Laos will pass the review. But there is a risk that it would not now because they're using this additional criteria.”

I’m Gregory Stachel.

Zsombor Peter reported on this story for VOA East Asia Pacific. Gregory Stachel adapted it for VOA Learning English. Hai Do was the editor.

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Words in This Story

least – adj. smallest in amount or degree

criteria – n. something that is used as a reason for making a judgment or decision

lockdown – n. a temporary state of restricted movement or activity

gross domestic product (GDP) - n. the total value of goods produced and services provided in a country during one year

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