Laos is facing a severe debt crisis driven by excessive borrowing, mainly from China, for large infrastructure projects such as the Laos–China Railway and hydropower developments. Over five billion dollars in Chinese loans have led to overcapacity and financial losses, especially in the energy sector of the country. Weak governance, poor planning, declining revenues, and the collapse of the Kip in 2022 have further deepened the crisis. Debt servicing now consumes over half of government revenue, while unclear lending and reliance on foreign currency debt have left Laos highly vulnerable. Although some see this as an example of Chinese debt-trap diplomacy, domestic mismanagement has also played a significant role. With China holding around half of Laos’ external debt and deferring repayments, default has been temporarily avoided. However, substantial debt relief, ideally involving the International Monetary Fund (IMF), is crucial for restoring stability and long-term economic recovery.
Pray for the LORD to expose and uproot systems of exploitation in Laos, both foreign and domestic. Pray for the LORD to protect the nation from every form of oppression in the name of partnership. (The Holy Bible, Psalm 33:11).
Pray for divine wisdom and discernment so that the authorities can manage the resources in Laos and tackle the debts. Pray for the healing and restoration of the economy of the country, broken by debt and mismanagement. (The Holy Bible, Psalm 80:19).
News Source: Lowy Institute
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