Recalibrating Lao National Development Priorities against the Backdrop of the COVID-19 Pandemic

Vientiane, 28 September 2020 – In-depth discussions on the implications of the COVID-19 pandemic for ongoing strategic planning under the Multi-stakeholder Taskforce cumulated this Monday in the Meeting among the Chairs and Co-chairs of the Sector Working Groups, where the Taskforce presented its findings. The Meeting was convened by the Ministry of Planning and Investment, on behalf of the Government, and the United Nations in Lao PDR.

H.E. Dr. Kikeo Chanthaboury, Deputy Minister of Planning and Investment, welcomed the participants and highlighted the importance of this consultation since “2020 is the most difficult circumstance of our life time due to the impact of the COVID-19 pandemic which has already imposed a major shock on Lao PDR and our neighbors, with effects that are likely to be felt for years to come.”

The Meeting, which also addressed the preparations for the annual Round Table Meeting and the roadmap in finalizing the National Socio-economic Development Plan, built on a series of five High-level Thematic Policy Dialogues organized by the Multi-Stakeholder Taskforce in early-to-mid September, aiming to reach a shared understanding of the key implications of COVID-19 and resulting policy priorities amongst a core set of national decision makers and development partners.

 “As is the case everywhere, COVID-19 has caused immense disruption, and warrants careful assessment of what will be possible over the coming years. It is by carefully considering the evidence and making the right strategic calls within the NSEDP that we stand the best chance of making progress toward our shared development goals in spite of the global pandemic,” said Ms. Sara Sekkenes, UN Resident Coordinator in Lao PDR.

The Policy Dialogues covered five thematic aspects: 1) macro-fiscal framework and financing for sustainable development, 2) trade and private sector, value chains and tourism, 3) human capital including the considerations of health and education, 4) skills development and sustainable employment, and 5) green growth, resilience and risk management.

On the macro and fiscal situation, policies to ensure a more stable macroeconomic framework including debt sustainability in light of COVID-19 were discussed. This included measures to improve revenue mobilization, strengthen public expenditure management for efficient disbursement of resources, improve the health of the banking system and support financial inclusion, and ensure effective macroeconomic monitoring and policy response.

Co-chairing the Thematic Dialogue, H.E. Mr. Bounleua Sinxayvoravong, Vice Minister of Finance stated, “the COVID-19 has posed severe challenges to the macroeconomic and fiscal situation of the country, and we need to think out of the box to meet the demands, including prioritizing among the priorities and continue with the ongoing fiscal reforms despite a difficult time to ensure a healthier macro economy in the medium to long term.”

During the discussion on trade, private sector, value chains and tourism, participants exchanged views on adjusting development strategies and remedial policies to mitigate the negative impacts of the pandemic, including improving the business environment, supporting struggling Small-and-Medium Enterprises, and releasing the potential of private sector in driving the recovery.

On the Human Capital, the Taskforce recommended that policies should prioritize investments necessary to take advantage of the demographic transition (with a booming youth population) and the urbanization process to build human capital and development potential. This includes investments in primary, secondary and vocational education; and in primary health services including sexual and reproductive health and nutrition.

On labour market and skills development, H.E. Mme. Baykham Khattia, Deputy Minister of Labour and Social Welfare, noted that “about 20% of the total workforce is now estimated to be unemployed. This is an alarming figure for the Government of Lao PDR, and we must find solutions in response to this increasing social and economic challenge.”

Attention was drawn to sudden, sweeping changes caused by the COVID-19 pandemic to employment, livelihoods, and international mobility. Consequently, it was recommended that policymakers should strive to manage changes for quality skilled workforce development and job creation in the context of slower economic growth, promote labor standards and compliance with labor law for decent work, and expand social protection while addressing stigmatization and discrimination in work place.

Finally, participants agreed that despite the impact, COVID-19 also represents an opportunity for Lao PDR to build back better and move along a more resilient, green and inclusive path towards sustainable development that leaves no one behind now, nor in future generations. Suggested targeted interventions include green budgeting in alignment with environmental and climate objectives; accelerating clean energy transition; investing in resilient infrastructure and supply chains; and building up community capacity to respond to future shocks.

H.E. Dr. Saynakhone Inthavong, Vice Minister, Ministry of Natural Resources and Environment, emphasized “the need to take stock of existing collaborations between initiatives and Ministries in taking forward to improve resilience and preparedness”, noting that “we already have many examples of cases where we are able to take forward priorities despite the constraints imposed by COVID-19, which we need to learn from”.

A key recurring message from all of the discussions was the value of strategic inter-sectoral coordination structures that could support an efficient flow of information and implementation across sectors, building on the important work within the Sector Working Groups.

H.E. Dr. Kikeo Chanthaboury stressed the need to consider the changed circumstances as a result of COVID-19 and the implications for the targets and core assumptions behind the 9th National Socio-economic Development Plan; to reprioritize among existing priorities; and to appropriately sequence investments and priorities over the short, medium, and longer term. He called for the alignment of strategies and cooperation from all stakeholders and partners to contribute to the national development.

Near 100 participants joined the Meeting, including representatives from the Ministries of Planning and Investment, of Foreign Affairs, of Finance together with ten other governmental ministries; representatives from the National Assembly; National Institute for Economic Research;  Lao Women’s Union; Lao Youth Union; Lao Front for National Development; Lao National Chamber of Commerce and Industry; International Chambers of Commerce; INGO Network; Bank of Lao PDR; the Embassies of Australia, EU, France, Germany, Luxembourg, Japan, Thailand, Switzerland and USA and other development partners as well as the UN Country Team.