Bank of Lao PDR (BoL) governor Somphao Phaysith has told a meeting of government and business leaders that the central bank has significantly strengthened foreign exchange reserves, following concerns about their adequacy to cover the nation’s imports.
Speaking in Vientiane on Monday, Mr. Somphao said the bank currently holds reserves sufficient to cover “about six to seven months” of imports, according to Vientiane Times.
In March, a World Bank report expressed concern that Lao foreign exchange reserves were believed to have declined to about US$600 million at the end of 2013, the lowest level in a decade, providing coverage of only 1.3 months of goods and services imports.
Mr. Somphao’s estimate of six to seven months’ import cover implies a four- to fivefold increase in reserves. Details about how the substantial increase was achieved were not available.
Late last year, the BoL imposed limits on the ability of commercial banks to lend and disburse foreign currencies.
According to International Monetary Fund data, Laos’s foreign reserves averaged less than three months of coverage from 2000 to 2010, declining to an average of 1.7 months in 2011 and 2012.
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