According to the June 2026 Lao PDR Economic Monitor, released on July 9, Laos has made notable progress in restoring macroeconomic stability, including rebuilding foreign exchange reserves, stabilizing the exchange rate, and strengthening economic confidence. However, the report cautions that recent gains remain vulnerable to external shocks and require sustained reforms to support long-term growth and quality job creation.
World Bank Country Manager for the Lao PDR Khwima Nthara said four years of reforms have strengthened economic resilience, but the recent global oil price shock highlights the need to maintain reform momentum to protect vulnerable households, improve domestic revenue collection, and invest in human capital.
The report noted that international reserves reached a record US$4.2 billion in March 2026. However, public debt servicing is projected to reach 13 percent of GDP this year, limiting fiscal space for investment in health, education, and social protection.
The World Bank recommended that the government maintain prudent fiscal and monetary policies, strengthen domestic revenue mobilization, and provide targeted cash assistance to low-income households affected by rising food and fuel prices. It also advised that temporary measures to reduce price pressures, including fuel tax reductions, should remain time-bound and include clear exit strategies.
The report also highlighted the need to strengthen healthcare financing. Public health expenditure currently accounts for about 4 percent of the national budget, well below regional averages, contributing to declining use of public health services and high out-of-pocket medical expenses.
To improve healthcare outcomes, the report recommends gradually increasing health spending to 9 percent of the national budget by 2030, prioritizing primary healthcare, improving payment systems, and strengthening public financial management through greater digitalization.
The World Bank said sustained investment in health will be critical to improving productivity and supporting Laos' long-term economic development.