Narrative
Full Description
Project narrative
In 2020, China Eximbank agreed to reprofile multiple loan agreements that it had previously signed with the Government of Laos. These debt service payment deferrals lasted for approximately 5 years (2020 and 2024) and provided more than $2 billion of cash flow relief, including $1.892 billion of cash flow relief ($1.422 billion in deferred principal payments and $470 million in deferred interest payments) between 2020 and 2023. 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. The value of deferred principal payments in 2024 is $463 million. It is known that Laos made interest payments to China in 2024. AidData has not identified any evidence that maturity extensions or interest rate reductions were provided. According to IMF reporting, there will be no more debt service deferrals in 2025.
Staff comments
1. Given that China Eximbank is the Government of Laos’ largest Chinese creditor by far, AidData assumes for the time being that China Eximbank offered the principal and interest payment deferrals. However, this issue warrants further investigation. 2. According to the World Bank’s International Debt Statistics, the Government of Laos was responsible for making average annual debt service payments to Chinese creditors worth $232 million between 2019 and 2019 and average annual debt service payments to Chinese creditors worth $60 million between 2020 and 2021 (a substantially lower figure due to repayment deferrals); however, it expected to make average annual debt service payments to Chinese creditors worth nearly $678 million over the next seven years (2022-2028). See https://www.dropbox.com/s/xv9xeboij1bkyds/Laos%20DRS%20Extract%20April%202023.xlsx?dl=0. 3. According to the World Bank, ‘[d]ebt service deferrals granted by major lenders in 2020-2021 amounted around 3.6 percent of GDP in 2021’ and ’[a]s a result, actual debt service payments are estimated to have declined to 48 percent of total revenues in 2021, compared to 65 percent in the 2021 [Government of Laos] plan.’ See https://pubdocs.worldbank.org/en/273661652363898384/Lao-Economic-Monitor-April-2022-final.pdf 4. According to the IMF, '[t]he authorities’ Debt Bulletin indicates that debt servicing to China was suspended: principal repayments in 2020 of about US$ 220 million, and of both principal and interest payments in 2021 and 2022 of about US$ 450 million and US$ 610 million, respectively.' See https://www.elibrary.imf.org/view/journals/002/2023/171/article-A003-en.xml. However, AidData relies on the annual deferred principal and interest figures that are reported in the '2023 Public and Publicly Guaranteed Debt Bulletin of Lao PDR' (pg. 9 of https://www.mof.gov.la/wp-content/uploads/2024/07/2023-Public-and-Publicly-Guaranteed-Debt-Bulletin-of-Lao-PDR.pdf). 5. An April 2024 World Bank publication (https://thedocs.worldbank.org/en/doc/5c2594a0cc6846465fe3bafda50ad993-0070062024/original/WB-LaoEconomicMonitorApril20-24web.pdf) indicates that '[d]eferrals of principal and interest owed to China amounting to about $2 billion (over 15 percent of GDP in 2023) provided temporary relief between 2020 and 2023.' A May 2025 World Bank publication (https://documents1.worldbank.org/curated/en/099052225232036650/pdf/P507388-c8df3b09-7fac-4a33-8344-c2e857e68395.pdf) indicates that 'from 2020–23 cumulative external debt service deferrals from Chinese lenders amounted to approximately 16 percent of GDP.' The same publication notes that 'deferrals of principal repayments to Chinese lenders continued in 2024.'