IDEAS home Printed from https://ideas.repec.org/a/bla/asiaps/v8y2021i1p94-113.html
   My bibliography  Save this article

Credit crunch: Chinese infrastructure lending and Lao sovereign debt

Author

Listed:
  • Keith Barney
  • Kanya Souksakoun

Abstract

Lao PDR's push for large infrastructure‐led economic growth has been delivered through a significant amount of financial leverage and a build‐up of sovereign debt obligations. The government now finds itself in danger of a sovereign default. This article traces the roots of this debt crisis over the past decade, focusing particularly on the role of hydropower. A significant share of infrastructure lending to Laos has been through Chinese policy banks. We argue that over‐lending to dam projects focused on the domestic energy market has been at the core of Laos' debt situation. Through 2020 the Lao Government has undertaken a series of restructuring measures, including privatisation of state assets, engaging in debt renegotiations with China, and attempts to secure new short‐term credit. We outline a range of other options Laos has to reschedule or restructure their sovereign debt, and offer policy targeted recommendations focusing on reforms in the energy sector.

Suggested Citation

  • Keith Barney & Kanya Souksakoun, 2021. "Credit crunch: Chinese infrastructure lending and Lao sovereign debt," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 8(1), pages 94-113, January.
  • Handle: RePEc:bla:asiaps:v:8:y:2021:i:1:p:94-113
    DOI: 10.1002/app5.318
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/app5.318
    Download Restriction: no

    File URL: https://libkey.io/10.1002/app5.318?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. World Bank & International Monetary Fund, 2019. "Kyrgyz Republic - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32566, The World Bank Group.
    2. World Bank, 2020. "Lao PDR Economic Monitor, June 2020," World Bank Publications - Reports 34048, The World Bank Group.
    3. World Bank & International Monetary Fund, 2019. "Benin - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32568, The World Bank Group.
    4. World Bank & International Monetary Fund, 2019. "The Federated States of Micronesia - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32573, The World Bank Group.
    5. World Bank & International Monetary Fund, 2019. "The Democratic Republic of the Congo - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32577, The World Bank Group.
    6. World Bank & International Monetary Fund, 2019. "Honduras - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32558, The World Bank Group.
    7. World Bank & International Monetary Fund, 2019. "Grenada - Joint World Bank-IMF Debt Sustainability Analysis," World Bank Publications - Reports 32567, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dwyer, Michael B. & Nanhthavong, Vong, 2023. "Making concessions pay? Historical vs. potential tax revenues from Laos’s rubber sector," World Development, Elsevier, vol. 172(C).
    2. Christoph Nedopil & Mathias Lund Larsen & Mengdi Yue & Yao Wang, 2022. "Prospects of the Multilateral Cooperation Center for Development Finance (MCDF) to catalyse infrastructure financing," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 9(1), pages 81-110, January.
    3. Khalil Ullah Mohammad & Mohsin Raza Khan, 2022. "Effectiveness Of Green Project Screening For Bank Lending: Evidence From Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(1), pages 93-103, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dwyer, Michael B. & Nanhthavong, Vong, 2023. "Making concessions pay? Historical vs. potential tax revenues from Laos’s rubber sector," World Development, Elsevier, vol. 172(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:asiaps:v:8:y:2021:i:1:p:94-113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=2050-2680 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.