Improved foreign reserves and exchange-rate stability have strengthened the Lao economy, although global uncertainty, oil prices and debt servicing continue to pose challenges.
The World Bank has projected Laos’ economy to grow by 3.8% in 2026, with recent reforms helping strengthen the country’s economic resilience. Progress in rebuilding foreign exchange reserves, stabilising the exchange rate and restoring economic confidence has contributed to improved macroeconomic stability.
International reserves reached a record US$4.2 billion in March, but fiscal pressures remain significant. Public debt servicing is expected to reach 13% of GDP this year, restricting the government’s capacity to invest in areas including health, education and social protection.
Against renewed external pressures, the World Bank called for prudent fiscal and monetary policies, stronger domestic revenue mobilisation and targeted assistance for low-income households affected by higher food and fuel costs. World Bank Group Country Manager for the Lao PDR Mr. Khwima Nthara said four years of reforms had strengthened the country’s economic resilience, while stressing the importance of maintaining momentum.
The report also identified healthcare financing as a longer-term priority. Public health expenditure currently accounts for about 4% of the national budget, with the World Bank recommending a gradual increase to 9% by 2030 alongside greater investment in primary healthcare, payment systems, and digitalisation of public financial management.
Source: World Bank
