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The impact of the global financial and economic crisis on Laos is becoming more serious and widespread, especially in the export sectors of different provinces, which experience drop in their exports, while government revenues have been decreasing and negatively affecting the implementation of different development projects across the country.
Standing Deputy Prime Minister Somsavath Lengsavad admits that the global economic and financial crisis has not only affected Laos' overall economy, but also sent extensive ripple effects to different provinces, especially in the export sectors which have already seen a decrease averaging more than 41% in exports over the last three months.
Hardest hit is the copper mining sector. With prices continuously declining in world markets, earnings from copper mining have dropped as much as 60%. In addition, decreasing demands for electricity abroad, especially in Thailand, have resulted in a drop of over 30% in electricity exports to that country. Moreover, coffee and garment exports have also dropped over 20% each, while agricultural products face a dramatic drop in their prices. That, combined with the lack of markets, has resulted in increasing inventories of agricultural products, such as corn, in northern provinces that now have tons of unexported corn on their hands. Growers of cassava, however, are luckier in that their produce is in high demand by Chinese companies who would buy all the cassavas that Lao farmers can produce, but at a lower price than before. Previously, a ton of cassava would bring farmers 400,000 kips or about 50 U.S. dollars, but now the price is only 320,000 kip, a 20% drop.
Consequently, revenues taken in by the government have dropped significantly. Mr. Somsavath admits that revenues for the 2008-09 fiscal year will at least decrease 700 billion kips, and that will result in a budget deficit of over 3,000 billion kips. All that will inevitably affect the implementation of many development projects, especially those in other provinces.
Songrit Pongern reported in Lao from Bangkok on June 02, 2009