Countries and Regions

	Table of Contents
p. 20 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Lao People's Democratic Republic

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IX. Local Cost Financing

90. During the last few years, the Government has introduced important changes to enhance revenue collection. These are: simplified indirect taxation, reduced tax exemptions, establishment and operation of the Large Taxpayer Unit, and strengthened tax audit procedures. The Government has recently rationalized the exchange rate used to value imports for tax purposes. Nevertheless, while the need to generate domestic resources to finance investments is well recognized, it will still take some time before the country can develop the necessary resource base to adequately finance the required level of investments because of the low domestic savings potential and the narrow tax base. The Government thus remains substantially dependent on external assistance to finance its development budget. ADB also recognizes the financial constraints facing the country given the current economic situation. ADB would, therefore, continue to consider local cost financing of projects while encouraging the Government to progressively increase its share of such costs.

Back VIII. Economic and Sector Work Program	Country Assistance Plans - Lao People's Democratic Republic