China Eximbank provides $82.5 million concessional loan for Oudomxay-Pakmong Section of No.13 Road (NR13) Rehabilitation Project (Linked to Record ID#64756 and ID#64757)

Project narrative

In 2012, China Eximbank and the Government of Laos signed a $82.5 million concessional loan for the Oudomxay-Pakmong Section of No. 13 Road (NR13) Rehabilitation Project. The loan carried a 2% interest rate, a 20-year maturity, and a 6.3382-year estimated grace period. The purpose of the project was to refurbish the 81.65 km north section of the No.13 Road (NR13), which runs from Pak Mong in Luang Prabang Province to Muang Xay in Oudomasay (Oudomxay) Province. The refurbishment involved upgrading the road surface from one with bituminous surface treatment to asphalt concrete. Yunnan Sunshine Road and Bridge Co., Ltd. and China Railway Third Survey and Design Institute Group Co., Ltd. were the contractors responsible for implementation. A groundbreaking ceremony was held on March 7, 2014, and the project was officially completed and handed over to the Lao Government on June 20, 2016. There are multiple indications that the China Eximbank loan for this project may have financially underperformed vis-a-vis the original expectations of the lender. In 2020, the Laotian authorities urgently sought debt relief from China Eximbank. At that time, the gross reserves of the Bank of Laos stood at only 1.5 months of import cover and credit rating agencies warned of a high default probability. In 2020, China Eximbank also agreed to reprofile multiple loan agreements that it had previously signed with the Government of Laos (as captured via Record ID#96464). These debt service payment deferrals lasted for approximately 4 years (2020 and 2023) and provided approximately $1.892 billion of cash flow relief ($1.422 billion in deferred principal payments and $470 million in deferred interest payments). Deferred principal and interest repayments in 2020 were worth $202 million. Deferred principal and interest payments were worth $426 million in 2021. Deferred principal and interest payments were worth $594 million in 2022. Deferred principal and interest payments were worth $670 million in 2023.