The Bank of the Lao PDR reported that Governor Bounkham Vorachit outlined a four-part plan to reduce average inflation to 5.5%-5.8% in 2027, with a ceiling of 6%, during the National Assembly’s second ordinary session. Inflation averaged 7.9% in the first nine months of 2026 and is forecast to remain at that level for the full year, exceeding the assembly-approved target of 5% plus or minus 2 percentage points. Electricity and fuel prices and the exchange rate were identified as the main drivers. The plan would limit annual credit growth to 16%, compared with the current 17.6%, and seek to stabilize the kip and exchange rate. Other measures include developing foreign exchange hedging tools, strengthening oversight of foreign exchange activity outside the banking system, considering high-value and auction-based foreign exchange markets, coordinating fuel import management, and directing credit toward agriculture and production that replaces imports or supports exports. The bank also plans to study financial rule relief, credit guarantee mechanisms, venture capital and private equity funds to improve businesses’ access to finance. The central bank is also pursuing a 2026-2035 strategy for sole domestic use of the kip and aims to bring 75% of export foreign currency receipts under management by the end of 2026, rising to 85% in 2030. Cross-border QR payment links now cover Vietnam, China, Cambodia and Thailand, while Laos-China e-CNY payments have been launched. Total credit rose 9.39% in the first nine months of 2026 from the end of 2025, including 13.30% growth in lending to micro, small and medium-sized enterprises, while the nonperforming loan ratio was 0.95%.
Bank of the Lao PDR targets inflation below 6% in 2027 and plans to cap annual credit growth at 16%
The Bank of the Lao PDR plans to reduce average inflation from a forecast 7.9% in 2026 to 5.5%-5.8% in 2027, with a ceiling of 6%. Measures include capping annual credit growth at 16%, stabilizing the kip and foreign exchange market, and supporting credit for domestic production. The bank is also advancing sole domestic use of the kip and tighter management of export foreign currency receipts.