Edition and Translation: Jenny Ball
Review: yuddy

On December 3, 2021, a train (right) departs from Vientiane, the capital of Laos, to Kunming, China. (AFPTV/STR/Getty Images)

Laos faces a difficult year in 2022, with dwindling cash reserves, rising inflation, skyrocketing oil prices, and a depreciating currency. The socialist country is repeating the mistakes of Sri Lanka and Pakistan, where the CCP China’s debt trap has crippled their economies. The public is becoming increasingly frustrated and enraged by such developments.

Sri Lanka appears to be the first country caught in the CCP’s debt trap and facing imminent economic collapse, followed by Pakistan, and now Laos.

In May, Laos’ inflation rate reached an 18-year high, making it one of the highest in Asia. In 2021, approximately 9,400 kip were exchanged for one dollar. It now trades at nearly 15,000 kip, a currency devaluation of more than 40%. The kip’s depreciation will be exacerbated as the US continues to raise interest rates.

Meanwhile, most of Laos has been experiencing gasoline shortages for months, with long lines at gas stations becoming common. Wages have remained stagnant, with the minimum wage remaining unchanged since 2018.

Of course, Laos’ main concern remains the country’s rising public debt. Its public debt will reach $14.5 billion in 2021, with roughly half of that owed to the CCP China. This figure accounts for 88 percent of Laos’ GDP, according to the World Bank.

Laos will inaugurate a new $6 billion railway linking Vientiane, the country’s capital, and Kunming, China, in December 2021. Laos expects the railway to be profitable by 2027, but analysts are concerned that the CCP’s loans to fund this and other projects will be unsustainable.

According to AidData, a research lab at the United States’ College of William and Mary, Laos faces $3.54 billion in “hidden debt” when it forms a joint venture to finance the railway, in addition to its $1.06 billion in debt obligations. The Chinese government is liable for 70% of the debt.

If profitability is insufficient, the Lao government may be forced to repay the total debt of US $3.54 billion, according to AidData.

Laos also owes CCP China 11 percent of its bilateral loan debt, according to Nikkei Asia. According to the World Bank, Laos owes approximately $1.3 billion in foreign debt, which will not be settled annually until 2025.

In Laos, a communist country, public dissent is not allowed, but popular dissatisfaction is growing. Harrison Cheng, deputy director of Control Risks, said that while Laos was unlikely to conduct the kind of protests that led to the resignation of Sri Lanka’s prime minister, the unrest simmering in the population could have dire consequences for the current leadership.

Comment: The debt trap is the best illustration of the CCP’s Belt and Road ambitions.

Link of the source article: hk.epochtimes.com