China Eximbank provides cash flow relief via 5-year debt service payment deferrals

📋 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 $678 million over the next seven years (2022-2028). See https://www.dropbox.com/s/xv9xeboij1bkyds/Laos%20DRS%20Extract%20April%202023.xlsx?dl=0.
3. According to the World Bank, ‘[d]ebt service deferrals granted by major lenders in 2020-2021 amounted around 3.6 percent of GDP in 2021’ and ’[a]s a result, actual debt service payments are estimated to have declined to 48 percent of total revenues in 2021, compared to 65 percent in the 2021 [Government of Laos] plan.’ See https://pubdocs.worldbank.org/en/273661652363898384/Lao-Economic-Monitor-April-2022-final.pdf4. According to the IMF, '[t]he authorities’ Debt Bulletin indicates that debt servicing to China was suspended: principal repayments in 2020 of about US$ 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).
4. 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.'

📚 Sources & References

• G7 to press China on debt relief for coronavirus-hit poor nations
• IMF Country Report No. 23/171 LAO PEOPLE’S DEMOCRATIC REPUBLIC 2023 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR LAO PDR
• Lao PDR Economic Monitor Restoring Macroeconomic Stability to Support Recovery
• Integrating China into Multilateral Debt Relief: Progress and Problems in the G20 DSSI
• Laos: Bailout or Bust
• Fitch Affirms Laos at 'CCC-'
• Withdraws Ratings
• RATING ACTION COMMENTARY Fitch Affirms Laos at 'CCC'
• Laos’ s big debt raises concerns
• Public and Publicly Guaranteed Debt Statistic Bulletin 2023 Vol 5
• Public and Publicly Guaranteed Debt Statistic Bulletin 2022 Vol 4
• Lao PDR Economic Monitor May 2025 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.