Lao People's Democratic Republic: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Lao People’s Democratic Republic

The 2025 Article IV Consultation discusses that Supportive external conditions and domestic policy tightening helped stabilize Lao People’s Democratic Republic economic imbalances, though policies eased recently. Supportive external conditions and domestic policy tightening have supported macroeconomic and exchange rate stability and a rapid decline in inflation, though policies have eased recently. Growth is expected to remain strong in the near term but moderate over the medium term. Significant vulnerabilities persist, and risks to the outlook are tilted to the downside. Policies should continue to focus on strengthening economic stability and achieving debt sustainability through tighter monetary policy, greater exchange rate flexibility to allow further accumulation of international reserves, maintaining stronger primary surpluses supported by further improving revenue collection and establishing a sound medium-term debt management and financing strategy, and improving financial oversight. Ambitious yet feasible structural reforms to strengthen the business environment, human capital, and governance are essential to achieving upper-middle-income country status in a sustainable manner.