Economic and Development Management System

In 1986, the Fourth Party Congress adopted a package of reforms intended to transform its economic management from a central command system to one which is market-bases and characterized by decentralized economic decision making, with the private sector playing an active role. The new economic management system emerging from the implementation of the economic reform package is referred to as the New Economic Mechanism (NEM) in the Lao PDR. Adoption of the NEM was subsequently confirmed by the Fifth Party Congress in 1991. An economic management system anchored on market principles i now enshrined in the Lao PDR Constitution.

The recent restructuring of the government machinery, significantly affected the administrative arrangements for economic, financial and development management. In early 1993, the Ministry of Economy, Planning and Finance was split into two. The new Ministry of Finance assumed responsibility for fiscal management, including collection and custody of tax revenues receipt and custody of non-tax revenues, e.g. proceeds from privatization and.- from external grants and loans, annul budgeting of revenues and expenditures, accounting, reporting and control of public expenditures, and cash and debt management. The new Committee for Planning and Cooperation (CPC) took responsibility for indicative macroeconomics and development planning, policy coordination, statistical coordination, external assistance coordination, public investment programming, foreign investment promotion, and implementation of the privatization program.

The Prime Minister issued Decree No. 132 On 30 August 1993 defining the organization of CPC. Based on unofficial English translation, the decree provides that CPC is a high level Central Supervisory Council; of Government mechanism; and also chief of staff for Central Committee and the Government for the coordination, research, implementation and work's supervision on : Socio-economic development, international cooperation, and foreign investment."

A system of indicative macroeconomics planning, medium-term public investment programming, and annual budgeting has been adopted as an instrument for development management. At the first session of the National Assembly in February 1993, the Deputy Prime Minister an concurrently President of CPC presented the country's development planning framework up to the year 2000, particularly the problems and constraints confronting the country, the principal goals and objectives, and the tasks ahead.

Within this planning framework, CPC, in cooperation with the spectral ministries and local government units, would prepare the country's development plan up to the year 2000, and the accompanying medium--term public investment program. The annual state budget and plan is formulated and presented to the National Assembly for approval in accordance with the aforecited planning/policy framework and public investment program.

The medium-term indicative plan, together with the public investment program (PIP). up to the year 2000 are expected to be completed by the end of 1994. Meanwhile, an outline PIP for 1994-2000 has been approved by the Government and presented at the Fifth Round Table Meeting (RTM) in Geneva on 21 June 1994.