Laos to tighten monetary controls as inflation stays above target
The central bank plans to limit annual credit growth to 16 per cent and bring more export earnings into the domestic banking system.
The Bank of the Lao PDR will strengthen its management of money supply and foreign exchange to curb inflation and stabilise the kip, Governor Bounkham Vorachit told the National Assembly. Inflation is expected to average 7.9 per cent in 2026, against the assembly’s target of 5 per cent.
Bounkham said the average for the first nine months of 2026 was 7.9 per cent. The bank’s studies attributed the largest contribution to rising electricity prices, followed by expensive fuel and movements in exchange rates. For 2027, it aims for inflation between 5.5 and 5.8 per cent, or no more than 6 per cent, assuming less volatility in fuel prices.
The bank intends to cap annual credit growth at 16 per cent, down from the current 17.6 per cent. It will also work with the Ministry of Industry and Commerce on import oversight, particularly for fuel, and increase lending for agriculture and production that supports exports or replaces imports.
Its foreign-exchange goals include bringing 75 per cent of export earnings into Laos by the end of 2026 and 85 per cent by 2030. Importers and exporters must use designated foreign-currency accounts at commercial banks under measures the central bank has introduced.
A strategy covering 10 years is being studied to make the kip the only currency used in Laos. Bounkham acknowledged that broader use would take time because demand for foreign currency remains strong and people are accustomed to multiple currencies.
To improve financing access, the bank will continue cooperating with credit guarantee companies to support businesses lacking adequate collateral, particularly micro, small and medium-sized enterprises. It is also examining the creation of venture capital and private equity funds.
