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Overview

  • Lao PDR has made good development progress over the past twenty years by halving poverty, reducing malnutrition and improving education and health outcomes – but there is room for further improvement. A child born in Lao PDR today will only be half as productive as she could be if she enjoyed full health and education. Malnutrition continues to be a critical issue, with stunting affecting over 30 percent of children under five. The maternal mortality rate also remains high, at 185 per 100,000 births (2017), with only 37.7 percent of births in rural areas occurring in a health facility. While a child in Lao PDR goes to school for 10.8 years, on average, she only receives the equivalent of 6.4 years of learning. The 8th National Social Economic Development Strategy (NSEDP) 2016–2020 spells out the Government of Lao PDR’s program to further reduce poverty and boost prosperity in the country.

    Lao PDR’s growth model has traditionally relied on the exploitation of natural resources, placing increasing pressure on the environment. Recognizing the limitations of this growth model, Lao PDR is focusing on reforms to support greener, more inclusive growth. This is important as 70 percent of the Lao population still depends on forests and waterways for income and nutrition. Many of the country’s poorest people, moreover, live in rural areas and are the most vulnerable to pollution, climate risks, and deforestation. The green growth agenda aims at improving local livelihoods by diversifying income sources and involving the private sector to spur market developments, for instance by promoting sustainable forest management and nature-based tourism.

    Economic growth in Lao PDR has slowed over the past 5 years. Growth fell from 6.3 percent in 2018 to 4.8 percent in 2019 due primarily to natural disasters that affected the agricultural sector.  The COVID-19 outbreak is expected to further intensify the country’s macroeconomic vulnerabilities, with limited fiscal and foreign currency buffers constraining the ability of the Government of Lao PDR to mitigate the economic impacts of the pandemic. 

    Last Updated: Apr 18, 2020

  • The World Bank Group (WBG) works with the government to reduce extreme poverty and boost shared prosperity, supporting the 8th National Socio-Economic Development Plan 2016-2020. The WBG’s current Country Partnership Framework (CPF) 2017-2021 was approved at the end of April 2017. The WBG carried out public engagement meetings with a wide range of stakeholders on Lao PDR’s Systematic Country Diagnostic (SCD), which underpins the CPF and highlights the key binding constraints to the twin goals of reducing poverty and boosting shared prosperity. A Performance and Learning Review to assess progress on the CPF was completed in 2020.

    Focus areas include:

    • Supporting Inclusive Growth: Putting public finances on a sustainable path and supporting financial sector stability, making it easier to do business, and investing in infrastructure for growth and inclusion.
    • Investing in People: Reducing the prevalence of malnutrition, improving quality of primary and pre-primary education and keeping girls in school, improving access to and quality of health services, reducing vulnerability and inclusive access to social services.
    • Protecting the Environment: Promoting environmental protection and sustainable natural resources management, putting in place enhanced disaster risk management and climate and disaster resilience.
    • Cross-cutting theme: Enhancing governance and creating a rules-based environment.

    The World Bank has an ongoing portfolio of 25 projects totaling US$744.8 million in Lao PDR, including 22 projects financed by the International Development Association (IDA), the World Bank’s fund for the world’s most in-need countries. The largest sectors by total financing are health, nutrition and population (14%), transport (12%), water (10%), environment, natural resources and the Blue Economy (10%) and energy and extractives (8%). The International Finance Corporation—the WBG institution that provides financing to the private sector—is also active, with a current committed investment of US$22.87 million with a disbursed and outstanding portfolio of US$16.41 million in power, banking, and manufacturing sectors. The current IFC outstanding advisory services portfolio stands at US$10.3 million. 

    Last Updated: Apr 18, 2020

  • The Poverty Reduction Fund (PRF)  is the largest multi-sector community-driven development project in the country. Through three phases of IDA financing, US$123.5 million has been provided. PRF has improved access to basic services for 1.2 million rural people through more than 5,000 community infrastructure projects in 2,841 villages in the poorest 55 districts of the country. In target villages, access to protected water increased by nearly 60 percent, and travel time to the nearest village was reduced on average by 114 minutes in the dry season and about 70 minutes in the wet season. The third phase of the project continues to improve access to vital infrastructure including schools, health clinics, roads and drinking water systems in about 250 poor village clusters in 10 provinces. Additional Financing for PRF III became effective in February 2020. PRF III will continue to improve access to community-prioritized basic services while the additional financing will increase support for the production and consumption of nutritious foods as a part of the Bank’s nutrition convergence approach in four northern provinces where the incidence of child stunting is high.

    The Health Governance and Nutrition Development Project, which started in October 2015, aims to improve the coverage of reproductive health, maternal health, child health and nutrition services for women and children in Lao PDR. Over five years, the project has benefited approximately one million women and children across 14 provinces. The project uses an innovative approach of linking disbursement of funds to improved performance in the delivery of basic health services. In addition, through a social and behavior change communication program for caregivers, children in high priority nutrition districts will benefit from improved counselling, changed behaviors and practices, and follow-up on their growth. The project further includes support for strengthening information systems and technical assistance in improving the performance of health financing and health protection programs, with a view to progress toward Universal Health Coverage in Lao PDR. It received additional financing in 2017, designed to scale up current efforts.

    The Early Childhood Education (ECE) Project, approved in April 2014, aims to increase the coverage and improve the quality of early childhood education services for 3- to 5-year old children in eleven provinces. The project supports construction grants for pre-primary classrooms using community-based contracting and establishment of Community Child Development Groups for 3- and 4-year olds. Midway results from the project show significant improvement in students enrollment, learning environment and outcomes in both literacy and numeracy, and a reduction in stunting. The Global Partnership for Education II project, approved in April 2015, focuses on strengthening school-based management and implementing a new reading pedagogy approach aimed at improving early literacy by targeting children in pre-primary classes. The project covers 88 target districts.

    The SME Access to Finance (SME A2F) Project, approved in June 2014, provides long-term funding for banks to support long-term credit to small and medium enterprises (SMEs). Beneficiaries include privately-owned and registered SMEs borrowing from commercial banks to expand their business activities, carry out new investments, or enhance their productivity; commercial banks providing long-term credit to SMEs; and the Department of Small and Medium Enterprise Promotion. Out of total approved sub-loans, 53% were for the trade sector, 33% for the service sector, 8% for industry, 3% for agriculture and 3% for handicrafts. The ratio of female beneficiaries is 59%.

    The Competitiveness and Trade Project, approved in 2018, has supported the government’s efforts to simplify business regulations, facilitate trade, and improve competitiveness. New and existing Lao firms have benefited from lower costs of doing business, easier procedures, and access to funding for business improvements. These reforms have also benefited the public as they can generate new formal employment opportunities, and lead to more competition, lower prices, and increased choice in goods. The project has ensured these reforms particularly benefit Small and Medium Enterprises and women-led enterprises. Reforms have included streamlining operating licenses, and making it easier to register a business, aiming to reduce by half the number of days to start a business and to prepare documentation for import and export. Firm competitiveness will be supported through the Business Assistance Facility, which helps individual private enterprises to access business development services, aiming to improve company management and innovation.

    The Scaling-Up Participatory Sustainable Forest Management project supports government efforts to build a solid foundation for sustainable forest management in Lao PDR. The project has supported over 1000 forest villages with livelihoods development support, developed management plans for over 2.2 million hectares of production forest, and helped develop significant new policies to protect and sustainably use forest resources. Complementing this effort, the Second Lao Environment and Social project is helping to strengthen environmental protection capacity, improve management of protected areas, strengthen enforcement of wildlife laws, and reinforce environmental assessments.

    The Lao Road Sector Project 2 , with parallel financing from the Nordic Development Fund (NDF), the European Investment Bank and the European Union, is now building on these achievements, and aims to improve climate resilience and strengthen maintenance systems to improve the  reliability of road connectivity for 2.2 million people living in urban and rural areas. 

    Last Updated: Apr 18, 2020

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LENDING

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

*Amounts include IBRD and IDA commitments



PHOTO GALLERY

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In Depth

Celebrating Women in East Asia and Pacific

Meet the women driving a more equal East Asia and Pacific, including Viengsam Indavong of Lao PDR.

Improving Public Financial Management

An improved PFM system can benefit all Lao citizens and provide them with more information on how the national budget is used.

Conservation: for Wildlife and Communities

The Second Lao Environment and Social Project (LENS2) is improving protected area management and wildilfe law enforcement.

Super-Clean Cookstoves Promise Results for Women and Climate

An initiative is introducing 50,000 clean cookstoves to replace charcoal and wood-burning stove in three provinces.

Lao PDR Development: Past, Present and Future

In the last decade, Lao PDR has achieved strong growth. The challenge now is to end extreme poverty.

Expanding Employment Opportunities in Lao PDR

An additional 96,000 young people will be looking for jobs each year. This report recommends steps on how to create more and better jobs.

Poverty in Lao PDR: Achievements and Challenges

Lao PDR has made great strides in reducing poverty from 33.5% in 2003 to 23.2% in 2013.

Additional Resources

Country Office Contacts

Vientiane
Xieng Ngeun Village, Chao Fa Ngum Road, Vientiane
Tel: (+856-21) 266 200
laos@worldbank.org
Washington
1818 H Street NW, Washington DC, 20433 Tel: +1 202-473-4709
eastasiapacific@worldbank.org