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Asia-PacificSeptember 3 2018

Will Belt and Road project derail Laos economy?

The Laos-China Railway project, part of China’s Belt and Road Initiative, is adding to Laos’s rising public debt, and many fear it will not deliver benefits to the domestic economy. Peter Janssen reports.
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Land-locked Laos hopes to achieve its long-term objective of being ‘land-linked’ by 2021 with the scheduled completion of a 414-kilometre medium-speed railway between Boten, on the Laos-China border, and Vientiane, the capital.

While the railway promises to establish Laos as a logistics link between its Asian neighbours, banks and international development agencies worry that the $6bn project, now subsumed under China’s Belt and Road Initiative, will add to Laos’s rising public debt without contributing much to the local economy. Public debt was 61.1% of gross domestic product ($17bn) in 2017 and is expected to hit 65% this year, according to International Monetary Fund estimates.

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