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LAO PEOPLE’S DEMOCRATIC REPUBLIC
Peace Independence Democracy Unity Prosperity
FY 2006/07 Fiscal
Performance and
Targets for
FY 2007/08
By: Mr. Phoukham SOULAT
Senior Official of Budget
Department
Presentation Outlays
Background of Country’s Public
Financial Management (PFM)
 Fiscal Performance in FY2006/07 and
Budget Plan for FY2006/07
 Measures to improve Fiscal
Management
 Progress on PEMSP implementation
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Fiscal Perfomance & Outlook
FY2006/07 Budget Execution
Domestic Revenue collection exceeded the
target by 10% reaching 5,306 billion kip;
 Total expenditure for the FY2005/06 was
8,306 billion kip or 21.7% of GDP;
 The total budget deficit was about 5% of
GDP
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Fiscal Perfomance & Outlook
FY 2006/07 Measures to Improve
Budget Performance
Training and advice on Tax and Customs
Laws implementation
 Intensified administration of tax collection
from all business units
 Budget execution based on the priorities set
and other emergency expenses
 Civil servants’ salaries disbursed regularly
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Fiscal Perfomance & Outlook
Overall Fiscal Directives
Diligently strive toward fiscal self-reliance
 Build up strengths gradually
 Integrate the budget plan with the Sixth
Five-Year Plan (2006-10)
 Continue to maintain macro-economy
Stability
 Facilitate further international integration
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Fiscal Perfomance & Outlook
FY 2007/08 Budget Targets
Total revenue is projected to be 7,069
billion Kip, in which domestic revenue is
6,030 billion kip.
 Total expenditure is projected to be 8,884
billion Kip
 The budget deficit is projected to be about
1,815 billion Kip, equal 4.2 percent of GDP
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Fiscal Perfomance & Outlook
Measures to Achieve FY 2007/08
Budget Targets
Improve revenue collection and the
effective execution of expenditures
 Reduce internal deficits
 Continue to improve financial agencies at
all levels
 Resolve problems concerning negative
phenomena in the financial sector
 Promote the private sector
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Fiscal Perfomance & Outlook
Revenue Implementation Measures (1)
Taxes
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Continue to disseminate the revised laws
Conduct nation-wide survey to ensure enterprises
fully report income & pay taxes
Encourage all businesses to maintain necessary
accounts
Modernize tax administration
The National Assembly has approved the VAT Law
in December 2006
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Fiscal Perfomance & Outlook
Revenue Implementation Measures (2)
Export and Import Taxes
Instructions on customs declarations
according to invoices will be drafted and
implemented this year
 Customs administration will be modernised
 The customs Department will intensify
monitoring of customs officers nation-wide
 A committee will be set up to investigate
smuggling cases
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Fiscal Perfomance & Outlook
Revenue Implementation Measures (3)
State Property
Revise law and regulations related to the
transformation of property to capital
 Revise legislation on natural resource taxes,
land leasing and state property, etc.
 Ensure all revenues from timber royalties
are received on time and in full
 Strengthen land tax collection activities
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Fiscal Perfomance & Outlook
Revenue Implementation Measures (4)
State-Owned Enterprises
Study with the purpose of improving the
performance of state-owned enterprises
 Intensify the management, monitoring, and
control of state-owned enterprises
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Fiscal Perfomance & Outlook
Expenditure Implementation Measures
Expenditures must adhere to budget-lines;
and off-budget expenditures not permitted
 Budget planning by Ministries,
Departments, Municipalities and Provinces
must comply with expenditure priorities
 Budget Department responsible for
budgeting and National Treasury for all
budget execution activities
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Fiscal Perfomance & Outlook
Other Initiatives
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1. Public Expenditure Review (PER)
 Examines expenditure trends from 2002 to
2005
 Reviews macro fiscal performance
 Assesses sustainability of the macro fiscal
framework and budget financing by source
 Reviews institutional framework of PEM
 Conducts intra-sectoral analysis of public
resources for priority sectors
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Fiscal Perfomance & Outlook
PER Recommendations
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Increase domestic revenue mobilization
Improve revenue sharing and intragovernmental transfers
Ensure the sustainability of the macrobudgetary framework by considering an
increase of the wage bill in line with the
resource available and
Enhance expenditure and services delivery
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Fiscal Perfomance & Outlook
Background of PEMSP
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National Growth and Poverty Eradication
Strategy (NGPES) has indicated a need for
improvements in capacity to manage public
expenditures
The Government’s “Policy Paper on
Governance” (March 2003), identifies Sound
Financial Management as one of four priority
areas.
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Fiscal Perfomance & Outlook
Why the PEMSP?
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Framework for implementing government
policies/strategies laid out in NGPES.
To have a prioritized and sequenced program of
government initiatives in strengthening of public
expenditure management.
Framework for mobilizing and coordinating
external assistance in support of Govt-led PEM
strengthening initiatives to ensure consistency in
technical approach and appropriate sequencing and
avoid duplication of efforts.
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Fiscal Perfomance & Outlook
Strategic Objective to FY2009
 improve policy consistency, efficiency,
transparency and accountability in public
expenditure management
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strengthening institutional systems and
capacity and making progress towards
appropriate international financial
management standards
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Fiscal Perfomance & Outlook
PEMSP Achievements
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PEMSP officially launched November 2005
Steering and Implementing committee are in place
Re-establish Secretariat :
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Program document in the process of revision
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Include new budget law implementation activities
And the revenue department
Strengthen management of Program
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Recruitment IA in the process
TOR of SC, IC and Task force are drafted and discussed
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Fiscal Perfomance & Outlook
Budget Planning: progress
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New budget law adopted by NA Dec 2006
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Centralization on tax, custom and treasury administration
Prime decree and ministerial instruction issued
New framework for inter-government fiscal relation
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Medium Term Expenditure Framework (ADB TA)
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Develop MTEF for Education Sector
Develop MTFF and
Capacity building (Training and equipment)
Budget nomenclature being revised
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Revenue assignment and sharing system
Budget norm and grant system
Revised and start to pilot in the education sector
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Fiscal Perfomance & Outlook
Budget execution: Progress
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Decree on National Treasury
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Chart of Account
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proposal for upgrading of debt management system approved and
work on the ToR
Inspection and Audit
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Accounting classification (COA) approved and start to pilot
Debt management
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Drafted and discussed on the decree
New treasury mandate approved
Treasury centralization plan drafted and discussed
TOR for Inspection Department institutional strengthening drafted and
approved. EU support secured
The Peer review for SAO started
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Fiscal Perfomance & Outlook
Capacity Building: Progress
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PFM English training
Proposal for up-grading of training schools drafted and
funding partly secured (Jica/Vietnam/WB/FMCBC)
General training program drafted
Template for HRM system user requirements drafted
Formats for job descriptions, job profiling and work flow
analysis drafted
Outline of capacity building strategy drafted
Proposal for private public partnership seminar drafted
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Fiscal Perfomance & Outlook
Cont.
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ICT
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TOR for ICT upgrading of MOF approved and funding
secured
Outline for MOF ICT strategy drafted
Templates for user requirements specifications
drafted
Proposal for ICT seminar (senior management)
drafted
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Fiscal Perfomance & Outlook
Tentative schedule for PEMSP
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Revised long-term strategy, incorporate the budget
implementation and revenue functions
Establish Multi-donor trust fund
Draft harmonized project and reporting document
Continuity with ongoing activities
Start on basic activities and the core functions,
particularly focus on budget implementation
Get detailed work plan approved in Consultative
Group
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Fiscal Perfomance & Outlook
PEMSP Work Plan for 2007/08
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Fiscal Planning & Budget Preparation
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Continue develop the MTFF and MTEF, estimate
baseline and pilot for key sector
Develop budgetary norm, grant system and
revenue sharing framework
Pilot revised budget nomenclature
Strengthen the budget report and publication
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Fiscal Perfomance & Outlook
Cont.
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Budget execution, accounting & Reporting
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Finalize legislative framework (Treasury
decree/regulations & manuals)
Implement treasury centralization for the pilot
provinces
Develop detail plan for moving toward treasury
single account
Pilot the revision chart of accounts
Strengthening the IT system
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Fiscal Perfomance & Outlook
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State Audit Organization
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Start peer review and develop capacity building plan
Second PER
Develop measurement framework for
evaluation the progress of the PFM reform
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Fiscal Perfomance & Outlook
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Peace Independence Democracy Unity Prosperity
Thank You
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28 November 2006
Fiscal Perfomance & Outlook