Lao central bank governor removed amid economic crisis

National Assembly lawmakers on Tuesday removed the governor of Laos’ central bank at the end of its legislative session as top officials search for ways to address the country’s inflation and economic woes.

The assembly approved a proposal from Prime Minister Sonexay Siphandone to transfer Bounleua Sinxayvolavong, the governor of the Bank of Lao P.D.R., to a position in Luang Prabang province, according to the assembly’s vice-chairwoman, Sounthone Xayachack.

Laos’ economy hasn’t recovered much from blows brought on by the COVID-19 pandemic. International tourist numbers remain low, jobs are scarce and many younger workers have sought higher-paying jobs in Thailand or elsewhere in the region.

Also, higher fuel prices and the steady depreciation of the Lao currency, the kip, have fueled inflation, according to a report from the Lao Statistics Bureau in May.  

Laos’ economic problems are now affecting “the future of its food security and nutrition” in the country, according to the Asian Development Bank, or ADB.

Inflation has had a big impact on food prices, which has reduced people’s purchasing power and has forced many households “to devise food-coping strategies, such as reducing food consumption and meal frequency to bridge their nutritional needs,” the ADB said in a report last month.

The kip weakened by 31% against the dollar last year – a trend that was expected to continue this year, the World Bank has said. 

Laos’ high debt service obligations have constrained the government’s ability to respond “to immediate issues of high inflation, which has placed pressure on people’s incomes and living standards, as well as long-term labor productivity issues,” the report said.

Minister of Finance Santiphab Phomvihanh told lawmakers last month that the government will need at least US$10 billion this year to cover all debt-related expenses, but the central bank – had so far only brought in US$3 billion.

‘Talk and talk’

Lawmakers on Tuesday also approved a resolution that recommended the government address a teacher shortage, the increasing numbers of student drop-outs, the national debt and uncontrolled mining operations.

The Assembly also passed or amended 13 different laws, including laws on property rights, investment promotion, environmental protection and anti-corruption.

“Our country has two national priorities – solving economic-financial woes and cracking down on drugs,” lawmaker Sinava Souphannouvong said at a meeting last week. 

“I’m urging the government to set cracking down on corruption as the third national priority,” he said, pointing out that neighboring Vietnam adopted a campaign against corruption.

The reality, though, is that corruption “happens from the top,” according to a former government official in southern Laos who asked to remain anonymous to speak freely about the workings of government.

“The inspection agency dares not inspect the top and other high-ranking officials,” he told Radio Free Asia. “Only low-ranking officials have been punished.”

A businessman also believed that there will be no real impact from the government’s campaign against corruption.

“Oh, they just talk and talk, but nothing will happen,” he told RFA . “They also have two other national priorities: solving economic-financial problems and cracking down on drugs. But they have failed to implement these two priorities. I think they’re going to fail on the third one as well.” 

Translated by Max Avary. Edited by Matt Reed.