China Eximbank provides $3.8 million preferential buyer’s credit for Vientiane City Road Monitoring Project

Project narrative

In 2008, China Eximbank and the Government of Laos signed a $3.8 million preferential buyer’s credit (PBC) agreement for the Vientiane City Road Monitoring Project. The borrowing terms of the PBC are unknown. This project involved the installation of CCTV cameras along 10 main roads — in an areas measuring more than 100 square km — within the capital city of Vientiane. It also involved the laying of 60 km of fiber optic cable and the installation of a central command center — capable of monitoring the CCTV footage — for the city’s traffic police force. The project was supposed to be completed before the opening of the 25th Southeast Asian Games on December 9, 2009 and it achieved this objective. The project was officially completed and handed over to the local authorities on December 5, 2009. According to China’s Ministry of Commerce (MOFCOM), the project was completed in one year and seven days, making the project's estimated implementation start date November 28, 2008. 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.