The FINANCIAL -- The Asian Development Bank's (ADB) Board of Directors has endorsed a new 4-year country partnership strategy (CPS), which is expected to deliver $421 million in assistance through 2020 to the Lao People’s Democratic Republic (Lao PDR).
The new CPS will help the country achieve more inclusive and sustainable economic growth by diversifying its economy, increasing trade with its neighbors, and boosting private investment in small- and medium-sized enterprises.
“ADB supports the government’s efforts to transform the Lao PDR from a landlocked to a land-linked country and rise above the least developed country status by 2020,” said Yasushi Negishi, ADB Country Director in the Lao PDR. “This partnership strategy builds on our close collaboration, and ADB will continue to invest in programs and projects in sectors where we have strong operational experience.”
The Lao PDR has enjoyed stable economic growth in the last decade. Gross domestic product (GDP) grew 7.5% per year on average from 2011 to 2016, and per capita GDP increased from $621 in 2006 to $2,027 in 2016. The robust economic growth has led to a steady decline in the national poverty rate, which dropped to 23.2% in 2013 from 33.5% in 2003, according to ADB.
But challenges remain. Economic growth is mainly driven by only a small number of resource-intensive industries, such as mining, timber extraction, and hydropower. Much of the country’s infrastructure, including urban services, irrigation, rural electrification, and land transport, remains inadequate, and the country also faces challenges including governance, environmental degradation, inefficient public sector management, and limited human capital.
The new partnership framework seeks to help the government address these challenges by increasing infrastructure investments, which will help reduce logistics costs, attract more private sector investments, as well as broaden people’s access to markets, social services, and economic opportunities.
It also aims to help diversify the Lao PDR’s economy and provide jobs training for the non-resource sectors. The strategy will also focus on ensuring sustainable natural resource management and climate resilience. Gender equality and governance are crosscutting themes.
As the Lao PDR is centrally located in the Greater Mekong Subregion (GMS), the country partnership strategy will tap ADB’s considerable institutional experience in the GMS Economic Cooperation Program to expand regional cooperation and integration and foster more balanced growth.
ADB will also increase its private sector operations and mobilize more private sector resources to help the government implement the Eighth National Socio-Economic Development Plan 2016-2020.