What’s Driving Laos’ Debt Crisis?

After gambling with “high risk” levels of debt distress for more than a decade, Laos has fallen into a debt crisis (and possibly a trap). The latest data indicate that Laos’ total public and publicly guaranteed (PPG) debt increased from 68 percent of GDP ($12.5 billion) in 2019 to 88 percent ($14.5 billion) in 2021. Debt is forecast to surpass 100 percent of GDP this year and to continue growing in the coming years. External public debt amounted to 66 percent of GDP in 2021, around half of which is owed to China. Although the recent shocks have been pivotal in pushing Laos toward the edge of a debt crisis and possible default, the country’s current predicament seems more deeply entrenched in economic vulnerabilities that are inherent to the growth-centric agendas that have guided much international development efforts from the mid-1980s onward