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PRE FINAL DRAFT MID-TERM REVIEW of the EIGHTH NATIONAL SOCIO- ECONOMIC DEVELOPMENT PLAN, 2016—2020 Vientiane

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PRE FINAL DRAFT MID-TERM REVIEW of the EIGHTH NATIONAL SOCIO- ECONOMIC DEVELOPMENT PLAN, 2016—2020 Vientiane PRE FINAL DRAFT MID-TERM REVIEW OF THE EIGHTH NATIONAL SOCIO- ECONOMIC DEVELOPMENT PLAN, 2016—2020 Vientiane Ministry of Planning and Investment Contents Executive Summary.............................................................................................................................iii Chapter I. Context for the Eighth National Socio-Economic Development Plan (20162020) .............. 1 1. Main Directions and Targets .................................................................................................... 1 2. Contextual Analysis: the First Half of the Implementation of the Eighth National Socio- Economic Development Plan, 2016 to mid-2018 ................................................................................. 4 2.1. Overview of Changes ............................................................................................................ 4 2.2. International Commitments and Cooperation ...................................................................... 5 2.3. Graduation from the LDC category ......................................................................................11 2.4. Green Growth and the Eighth NSEDP...................................................................................16 Chapter II. Implementation of the Eighth National Socio-Economic Development Plan (2016 to mid- 2018) 25 1. Outcome 1: Inclusive Economic Growth ................................................................................25 1.1. Outcome 1, Output 1: Sustained and inclusive economic growth.........................................25 1.2. Outcome 1, Output 2: Macro-economic stability achieved...................................................37 1.3. Outcome 1, Output 3: Integrated development planning and budgeting .............................41 1.4. Outcome 1, Output 4: Balanced regional and local development achieved ..........................47 1.5. Outcome 1, Output 5: Public/private labour force capacity improved ..................................59 1.6. Outcome 1, Output 6: Local entrepreneurs are competitive in domestic & global markets ..64 1.7. Outcome 1, Output 7: Regional and international cooperation and integration achieved ....66 2. Outcome 2: Enhanced Human Development ..........................................................................74 2.1. Outcome 2, Output 1: Improved living standards through poverty reduction using the Three Builds Directions .............................................................................................................................74 2.2. Outcome 2, Output 2: Food security ensured and malnutrition reduced ..............................78 2.3. Outcome 2, Output 3: Universal access to quality education achieved .................................83 2.4. Outcome 2, Output 4: Universal access to quality health care services achieved .................97 2.5. Outcome 2, Output 5: Improvement of and access to social protection achieved ..............109 2.6. Outcome 2, Output 6: National traditions and culture protected .......................................112 2.7. Outcome 2, Output 7: Political stability, social peace, order, justice and transparency maintained ...................................................................................................................................113 3. Outcome 3: Improved Environmental Protection .................................................................116 3.1. Outcome 3, Output 1: Environmental protection and sustainable natural resources management achieved..................................................................................................................116 3.2. Outcome 3, Output 2: Preparedness for natural disasters and risk mitigation achieved .....124 i 3.3. Outcome 3, Output 3: Instability of agricultural production reduced .................................125 4. Cross-Cutting Outputs ..........................................................................................................127 4.1. Cross-Cutting Output 1: Public governance and administration enhanced .........................127 4.2. Cross-Cutting Output 2: Local innovation and use of science, technology and telecommunications promoted, information and communication technologies (ICT) enhanced ....132 4.3. Cross-Cutting Output 3: Gender equality and empowerment of women and youth ...........136 4.4. Other Cross-Cutting Issues.................................................................................................140 5. Recommendations................................................................................................................144 5.1. Policy recommendations ...................................................................................................144 5.2. Recommendations on Strategic Planning ...........................................................................148 References .......................................................................................................................................150 Acronyms .........................................................................................................................................153 ii Executive Summary Introduction The Government of Lao PDR’s 8th National Socio-Economic Development Plan (8th NSEDP) has reached the mid-point of its five-year implementation period. The Government launched a Mid-Term Review (MTR) process to take stock of progress achieved so far, adapt the plan as needed over the remainder of the implementation period and inform the development of the follow up Ninth NSEDP (2021-2025). The MTR comes at an important time. Lao PDR reached the threshold for graduation from the LDC category for the first time in 2018 and could reach full graduation in 2024. It also recently completed its first SDG Voluntary National Review (VNR) and presented results at the High-Level Political Forum (HLPF) on Sustainable Development in July 2018. As the Government considers the remainder of the 8th NSEDP implementation period and begins a new planning cycle for the Ninth NSEDP, it is committed to further strengthening strategies and activities that align and support LDC graduation, the 2030 Agenda, and green growth. Implementation of the 8th NSEDP has taken place in a relatively challenging regional and international environment. Most prominently, Lao PDR remains susceptible to disasters, evidenced by the July 2018 flooding that affected 13 provinces across the country, especially communities in Attapeu. These events will affect significantly progress towards 8th NSEDP targets. The Post Disaster Needs Assessment (PDNA) will assess impact and point to priority areas for attention and policy change that will supplement the directions recommended by the MTR. Outcome 1: Inclusive Economic Growth Output 1: Sustained and inclusive economic growth. Structural economic transformation is central to the vision of the 8th NSEDP and anchors the Government’s long-term sustainable growth strategy targeting non-resource based industrialization, productive capacity building, and reduced economic vulnerabilities. Lao PDR made important progress during the first half of 8th NSEDP implementation. Average annual GDP growth has been around 6.8 percent, just below the plan target. Notably, industrial sector growth surpassed 8th NSEDP targets over the first two plan years though there is likely to be a decrease in 2018 related to the impact of the floods. But challenges to meeting the ambitions of the 8th NSEDP remain. Job creation outside the agriculture sector remains limited and economy-wide growth has not significantly altered the composition of employment. Industry is also still dominated by resource-based products and exports are concentrated both in terms of their source and trading partner. The Government recognizes the challenges to the sustainability of its current growth model. Continued efforts to remove growth constraints of the non- resource industrial sector, improve the business environment, increase agricultural productivity, and unlock the potential of the services sector will be important priorities. Strengthening management of the power sector is also critical to ensure quality, efficiency, and safety. This includes a strategic review of existing and new hydropower investments and projects. Output 2: Macro-economic stability achieved. The 8th NSEDP prioritizes a stable macroeconomic framework as an essential requirement for achieving the plan’s vision. At the plan’s mid-point, Lao PDR is on track to meet many macroeconomic NSEDP targets, including for inflation and the budget deficit. However, prudent debt management must be a priority over the remainder of the 8th NSEDP period and beyond. The Government will put greater emphasis on building fiscal buffers, strengthening public iii financial management, emphasizing concessional borrowing, and implementing a comprehensive debt management strategy. Other priorities will include increasing the inclusiveness of finance, strengthening the banking sector, improving tax administration and collection, and enhancing the environment for business and investment. Output 3: Integrated development planning and budgeting. The Government recognizes the challenges it has experienced in past cycles with aligning development planning and financing and it is committed to ensuring that funding allocation is timely and aligned with national development strategies. Meeting Lao PDR’s development challenges will require significant increases in resources.
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