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WEEKLY NEWSLETTER
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Laos
Index
By Decree 14 of March 1988, prices of most goods are no
longer
set by the government; exceptions include basic utility
and mineral
prices. Instead, a new system of "unified prices"--free
market
prices--was instituted. As a result, prices of rationed
and
subsidized goods such as rice, sugar, cloth, and petroleum
increased, and procurement prices were raised by 50
percent to 100
percent.
In addition, in 1988 the wages of state employees,
previously
paid through coupons redeemable for subsidized goods at
state
stores, began to be gradually remonetized. Very high
inflation
rates soon caused a real drop in annual wages, however,
and low
rates of tax collection gave the government less revenue
to spend
on wages. As a result, large arrears built up on salaries
that are
quite small. In 1990 salaries were increased by 83
percent, and
arrears began to be paid off, contributing to the increase
of 65
percent in government expenditure. Once paid, however,
salaries
almost immediately go again into arrears. Moreover, the
salary
increase is not sufficient for state employees to recoup
real
losses from inflation.
Data as of July 1994
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