PM speaks on budget deficit, inflation and natural resources

A reluctance to increase the budget deficit and plans to control inflation were two major parts of a speech by the Prime Minister to the National Assembly on Friday.

PM Bouasone Bouphavanh was responding to an NA suggestion that the government increase the deficit to invest more in human resource development.

Mr Bouasone said the government did not want to increase state debt because Laos already had significant domestic and foreign debt. But if there was a project in an essential area the government would consider this option, he said.

Mr Bouasone said inflation was rising due to increasing oil prices, which also drove up the price of other goods. It was not caused by economic mismanagement.

To lessen the impact of rising oil prices and reduce Laos ' reliance on oil, the government will promote the development and use of renewable energies.

The government has permitted two companies, one from Canada and another from Vietnam , to survey oil and gas deposits in northern and southern Laos .

Mr Bouasone said a taskforce would be formed to prevent merchants from unreasonably increasing the price of fuel and other basic commodities, and state departments and organisations would be instructed to use all resources economically.

Mr Bouasone also spoke about the conservation of natural resources throughout the country.

“We need to ensure sustainable and effective use,” he said.

“Without natural resources and energy, we can not achieve development.”

Mr Bouasone had been questioned about the environmental impact of constructing hydropower plants along the Mekong River . He said the benefits of these projects would far outweigh any negatives.

In the rainy season, he said, water in the Mekong River flowed at rate of 55,000 cubic metres per second. In the dry season this slowed to 2,500 cubic metres per second, and branches of the river were gradually drying up.

Constructing dams in the river would prevent water from flowing into the sea, and river levels could be kept at the same height as in the rainy season. If flooding became a concern, water could be released from the dam to prevent this from occurring.

He agreed with an NA suggestion that revenue generated by such dams could be used to develop human resources and address slash and burn cultivation.

Mr Bouasone also said the government would continue to reform the national education system, particularly by raising the standard of teachers and improving curriculum in vocational schools to produce skilled labour to meet local skills shortages.

NA President Thongsing Thammavong also spoke on Friday to conclude the government reporting phase of the session.

He highlighted a number of challenges for the government to improve.

He said the 111 priority projects had not produced fruitful enough results and promotion of Party ideology did not receive enough effort.

Mr Thongsing said state administration and management had not been effective and education against corruption was not done properly.

Goods production and the sale of natural resources like timber and minerals did not meet potential. NA members agreed the management of forestry resources and timber businesses were still chronic issu es.

He said the government was slow in implementing solutions for rural development, poverty reduction, permanent job provision and the eradication of slash and burn cultivation.

Mr Thongsing said management of foreign labour and foreign expatriates had not been done well. Labour skills development was not efficient and government revenue was still going missing.

The use of loans, grants and state investment was not highly effective and debt disbursement had not been done in accordance with NA approved plans, he said.

By Souksakhone Vaenkeo
(Latest Update July 14, 2008)