Laos-China Laos default will now give momentum to Chinese debt trap policy
Beijing: Laos, the only landlocked country in Southeast Asia, is currently facing an intense economic crisis and there seems to be no respite from it without some form of a Chinese bailout or debt forgiveness, media reports said.
Various warning signs are blinking red in the small Southeast Asian country.
The national currency, the kip, has lost around a third of its value against the US dollar compared to this time last year.
Inflation hit 23 percent in June, its highest level in decades. Meanwhile, much of the landlocked country faces fuel shortages, reports Asia Times.
The communist-run government has huffed and bluffed but finally undertook a cabinet reshuffle in late June, bringing in a new commerce minister and central bank governor.
Some emergency measures have stemmed certain economic problems from worsening.
“The chances that Laos will default on its debt obligations are extremely high,” Carl Thayer, an emeritus professor at the University of New South Wales in Australia told Asia Times.
Indeed, the country’s foreign debts have swelled to over US$14 billion, or 88 percent of gross domestic product (GDP).
Around half that amount is owed to China, including the Lao state’s one-third stake in the $5.9 billion China-Laos railway, a megaproject that opened in December amid concerns about the line’s commercial viability.
Support Our Journalism
We cannot do without you.. your contribution supports unbiased journalism
IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.
