The average annual growth of Gross Domestic Product at constant 1990 prices since 1990 was computed at 6-7%, which is quite respectable even when compared to the economic growth performance of other countries in the Southeast Asian sub-region. This growth was achieved as inflation was gradually brought down form a record high of 75.9% in 1989 to 6.3%. The single digit inflation rate was in line with target that it should not be higher than that prevailing in the country's major trading partners. AT the same time, the domestic currency remained stable since October 1989 within the range of kip 700 to kip 720 (parallel market buying rate) to the US dollar. Prudent fiscal and monetary policies together with sustained external assistance inflow contributed to the stability of the exchange rate and domestic prices.

With reference to fiscal policy, government budget deficit as a proportion of GDP was significantly reduced from more than 10% in 1992 to 6.1% in 1993 through intensification of efforts in tax revenue collection and tighter control on government spending. This enabled the government, for the first time in so many years, to achieve a modest surplus in the budget's current account.

Sustained inflow of external assistance also minimized recourse to currency and credit creation to finance the overall budget deficit. As show in detail in Part Three - Data on External Assistance, total inflow of external assistance in 1993 was recorded at $227.6 million, compared to an average of around $170 million for the past three years.

Liquidity (broad money supply) increased substantially in 1993 by 65% largely due to expansion of local and foreign currency savings and fixed time deposits. This may be an indication that the policy of positive real interest rate has been effective in promoting higher level of domestic savings.

The Balance of Payments current account deficit (excluding official grants) remained high as a proportion of GDP at 8.4% in 1993. However, an overall BOP surplus continued to be realized largely due to sustained 'inflow of external assistance, thereby allowing further strengthening of the international reserves position. As of the end of 1993, gross international reserves stood at $151.0 million (as against $81.2 million a year ago(, which is equivalent to 4.8 months of imports. This level of international reserves is certainly comfortable by any international standard.

The external debt service burden of the country has remained manageable at around 5% of exports despite an increase in the debt stock due to its highly confessional term. AL of the disbursed and outstanding debts of the Lao PDR were acquired so far from official bilateral and multilateral sources.

Despite its respectable growth performance since the adoption of the NEM, the Lao PDR remains one of the least developed countries. Its per capita income estimated at $290 in 1993 is still one of the lowest in the world. However, it excludes subsistence activities of a considerable proportion of the population who live in isolated villages, where non--monetized economic transactions are still prevalent.

The Lao PDR has a Human Development Index of 0.385, with a rank of 133 among 173 countries.