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Laos
Index
Capital expenditures rose slowly throughout the 1980s,
from
about 55 percent of total expenditures in 1983 to about 66
percent
in 1988; however, by 1989 they had begun to decrease as a
result of
limited absorptive capacity, a critical factor in the
economic
picture because it seriously affects economic development.
Wages
and salaries accounted for the largest portion of
expenditures,
increasing from 11 percent of expenditures in 1983 to 42
percent in
1988. A substantial amount of this portion in the late
1980s was
spent on salary increases and arrears payments: many civil
servants
had not been paid for up to two years. Subsidies to
state-owned
enterprises make up most of the remainder of expenditures,
but by
the end of the decade these subsidies were cut back in
response to
the reforms of 1988 and 1990. Expenditures for operation
and
maintenance of basic infrastructure remained inadequate
throughout
the 1980s. Defense expenditure is an important part of the
government budget; however, no figures are available
(see The Defense Budget
, ch. 5).
Government expenditure as a percentage of GDP increased
from
10.7 percent in 1986 to 14.2 percent in 1990; capital
expenditure
increased from 7.7 percent to 12.1 percent in the same
period.
However, although the growth rate of total government
expenditure
increased from 8.3 percent in 1987 to 65 percent in 1990
as wage
and salary payments increased, growth in capital
expenditure slowed
dramatically, from 14.9 percent to slightly negative
growth in the
same period, because of limited absorptive capacity and
decreased
aid from nonconvertible currency area countries.
Data as of July 1994
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