Vientiane - Communist Laos will need to borrow an estimated 4.5trillion kip (566 million dollars) this fiscal year to address its ballooning budget deficit, a state media report said Friday.
Over the year to September 30, Laos plans to spend 29.7 trillion kip but projects only 25.2 trillion in revenues, forcing it to borrow from foreign and domestic sources, the Vientiane Times reported.
During the first six months of fiscal 2013-14 the government collected only 9.2 trillion kip, significantly lower than forecast, the government mouthpiece said.
"The three major reasons for the large fiscal deficit have been overly optimistic revenue projections, large wage increases and allowances awarded without due regard for their impact on the country's fiscal and external positions, and development projects financed off budget," the Asian Development Bank (ADB) said in its latest report on Laos.
The Lao government hiked base wages for the civil service by 37 percent last year and plans further wage hikes this year, despite problems with making payments, the ADB said.