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Tel: (+856-21) 266 200


1818 H Street NW, Washington DC, 20433
Tel: +1 202-473-4709

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Lao PDR Overview

Last update: April 2014

The development of Lao PDR’s natural resources has helped the country achieve consistently high economic growth rates throughout the last decade. Reforms underway have reduced poverty and stimulated broad-based growth. However, fast growth is also putting the country under increasing macroeconomic strains that will need careful management. In the longer term, Lao PDR’s key challenge is to ensure that natural resource wealth is transformed into investments in improved public infrastructure, services, and better health and educational outcomes for all, especially the poor.

In 2012, Lao PDR reached a GNI per capita of $1,260, and the country moved up from its previous lower income status to become classified as a ‘lower-middle income economy’ in 2011. At this pace, Lao PDR is on track to achieve its long term vision: to graduate from the Least Developed Country status by 2020.

Natural resources - forestry, agricultural land, hydropower, and minerals - comprise more than half of Lao PDR’s total wealth. From 2005 to 2010, the hydropower and mining sectors combined generated about one third of the country’s economic growth. The growth in these sectors resulted in significant revenue increased which contributed to poverty reduction. It has also spurred progressive changes in environmental legislation.

Lao PDR, a member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community, is increasing its integration into the regional and global economy.  On February 2, 2013, Lao PDR officially became a full member of the World Trade Organization, the culmination of a 15-year process of reforms and negotiations.

Lao PDR made good progress on many of the Millennium Development Goals but is off track in some areas. These include malnutrition (40% of under-five children are stunted), measles immunization, maternal mortality rate, skilled birth attendance, and gender equality.

In the Seventh National Social and Economic Development Plan (NSEDP) for 2011-2015, the government laid out its poverty reduction strategy to meet the MDGs by 2015, aiming to foster economic growth with equity, develop and modernize the country’s social and economic infrastructure and enhance human resource development.

The World Bank Group (WBG) continues to work with the government as it lays the foundations to graduate from Least Developed Country status. The WBG’s operations in the country are guided by the Country Partnership Strategy (CPS) for 2012 to 2016, designed to support the government’s Seventh NSEDP and build stronger institutions for sustainable and inclusive development.

Last update: April 2014

The World Bank Group Country Partnership Strategy (CPS) for Lao PDR 2012-2016 has three strategic objectives, with a cross-cutting theme of stronger public sector management.

Competitiveness and Connectivity. The WBG supports efforts towards improved trade facilitation, economic diversification and a better investment climate through project financing and analytical work. It also aims to help government improve people’s access to transport and energy infrastructure services to facilitate regional connectivity.

Sustainable Natural Resource Management. Through project financing and advisory services, the WBG assists in strengthening government capacity to make informed decisions on resource-based investments. It also supports the government in strengthening and implementing institutional, legal and regulatory frameworks that aim for sustainable development of natural wealth – water resources, minerals, forests and biodiversity - and mitigate the environmental and social impacts of natural resource development.

Inclusive Development. The WBG continues to support the government in providing essential maternal and child health services and access to quality primary education in targeted, disadvantaged districts. It also builds on successful community driven platforms to assist communities in remote and poor areas, particularly among ethnic groups and women, to benefit from increased opportunities to participate in and benefit from development and livelihood activities.

International Finance Corporation (IFC) supports small and medium enterprises and larger firms in Lao PDR through innovative investments and advisory services that help create jobs, raise incomes, and reduce poverty. In Lao PDR, this begins with helping business and consumers obtain financing by investing in financial institutions and advising them on commercially viable products and services. IFC also advises the government on developing business-friendly laws and regulations to improve opportunity for investors. The World Bank and IFC have been working closely through joint projects in supporting the energy sector, improving access to finance, and introducing PPP in the transport sector. 

Last update: April 2014

The NT2 Multi-purpose Hydroelectric Project is jointly implemented by the Nam Theun 2 Power Company and the Lao PDR government. It is supported by financing from 27 parties including the World Bank, MIGA and Asian Development Bank. By 2035, the project is expected to generate around $2 billion in government revenues for poverty reduction and environmental protection through the sale of electricity to Thailand and into the Lao PDR grid. Presently, project revenues from electricity sales are being used to improve living conditions, health care, education for local communities, and to provide access to roads and electricity in remote areas. It is contributing $1 million per year for administration of the Nakai Nam Theun National Protected Area during the 30 year concession and operations period and is improving living conditions for around 6,300 resettled people.

The First and Second Education Development Projects helped improve quality of education in six provinces by developing a range of teaching-learning tools. Under these projects, 443 schools were built, approximately 4,000 teachers were trained, and more than two million textbooks were distributed.

The Rural Electrification Project is extending the electricity grid to rural households in southern provinces and is also promoting off-grid renewable energy throughout the country. Today, 85 percent of households now have access to electricity, up from only 16 percent in 1995.

The Poverty Reduction Fund (PRF) is the largest multi-sector community-driven development project in the country, with total IDA financing amounting to $34.35 million. PRF resulted into the construction of 86 bridges, access to clean water for 668 villages, the development of 154 irrigation schemes, 3,042 km of rural access roads have been upgraded, and 598 schools and 62 health clinics have been built in remote villages.  The Second Poverty Reduction Fund is ongoing.

Customs and Trade Facilitation Project financing has provided for the automation of customs systems. This led to faster clearances at the border and better management of revenues. The WBG also acted as the trust fund administrator for the Trade Development Facility Project. The project contributed towards substantial trade negotiating efforts which culminated in Lao PDR’s formal WTO accession in February 2013; the establishment of a permanent National Trade Facilitation Secretariat; and the launch of an electronic Trade Portal that puts all trade-related information on tariffs, licenses, measures, laws, regulations and import/export procedures into the public domain.


Lao PDR: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

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