(KPL/VNA) - In a bid to increase domestic production and deal with ongoing economic challenges, the Bank of Laos (BOL) has allocated 4.5 trillion LAK (225 million USD) toward a credit policy to support local businesses.

Local media reported that this financial move aligns with the Lao Government’s aim to reduce imports and bolster the production capacities of domestic industries. This will eventually lead to a rise in exports that will help reinstate the country’s depleting foreign exchange reserves, thereby strengthening the Lao kip and reducing inflation rates.

Under the policy in effect until 2025, the central bank offers loans to commercial banks at a low annual interest rate of 2.5%, allowing the latter to charge a maximum interest rate of 6% from customers who can apply for loans of up to 5 billion LAK.

Notably, the BOL’s recent decision outlines the annual allocation of 100 billion LAK to Vientiane, Champassak, and Savannakhet provinces, and 80 billion LAK to each of several other provinces.

Businesses engaged in agriculture, forestry, industry, commerce, information, culture, and tourism are eligible beneficiaries who could apply for this loan. Agriculture and forestry businesses will also be encouraged to seek financial assistance for various purposes, including short-term crop cultivation, animal husbandry, and the cultivation of fruit trees and industrial plants like rubber, eucalyptus, and agarwood.

The industry and commerce sector can also apply for monetary support for processing, particularly agricultural products, along with essential items required in construction, packaging, chemicals, and handicrafts. Services and hospitality businesses, including hotels, tourist facilities, road access improvement projects, tour operators, and tourism product providers could also be potential applicants for this favourable loan scheme.

Additionally, in order to reduce financial pressures on Lao residents, on 22 August, the BOL implemented the government’s credit policy, allocating 2.5 trillion LAK to reduce interest costs on loans secured by businesses from commercial banks, aiming to stimulate economic growth.

In recent months, the Lao Government has rolled out several measures to address economic and financial challenges, including the recent issuance of a third tranche of bonds worth 3 trillion LAK. This bond sale is part of the government’s comprehensive strategy to confront and ease the nation’s economic woes.

KPL