The Budget Deficit

Laos ran a fiscal deficit throughout the 1980s. The deficit expanded greatly in the second half of the decade, from about 12 percent of GDP in 1985 to between 25 percent and 30 percent of GDP in 1988 and 1989. This deficit was fueled by both a sharp decrease in nontax revenue coming mainly from surpluses of state-owned enterprises and a large jump in expenditures, particularly for wages and salaries (see table 8, Appendix). By 1990, however, the deficit had decreased (relatively) to about 17 percent of GDP and was continuing to decrease as previously implemented reforms, especially on taxes and the banking system, took effect.

Data as of July 1994