This country assistance program evaluation assesses the perormance o ADB country strategies and assistance programs or the Lao People’s Democratic Republic during the period o 2000–2009. It identies actors aecting this perormance,draws lessons, and makes recommendations or improving the uture perormance o ADB assistance.
he Lao People’s Democratic Republic (Lao PDR) is currently undergoing threelinked transitions: rom a centrally-planned to a market economy, rom asubsistence-oriented and largely sel-contained economy to a commercially-oriented and regionally-integrated economy, and rom an agrarian to a moreurbanized society. Despite these, a number o actors constrains the developmento Lao PDR. Among them, (i) a signicant transport inrastructure decit, whichraises costs and limits access to markets and services or signicant portions o thepopulation; (ii) shallow nancial markets that cannot eciently support the rapidgrowth in economic activity; (iii) limited human capacity, especially skills neededor a modern, entrepreneurial, and increasingly urban economy; (iv) legislativeand institutional underpinnings o a market economy that are improving but stillunderdeveloped at this stage; (v) approaches to economic management thatincreasingly recognize the importance o entrepreneurial behavior but still constrain itin practice with excessively discretionary and opaque decision-making and regulation;and (vi) institutional capacity to und and deliver basic public services that continuesto be limited. Other challenges include the weak governance structures, vulnerabledebt sustainability, weak public expenditure management, spill-over eects o massiveresources-based oreign exchange earnings, and the vulnerable nancial sector.During 2000–2009, total ADB lending andnonlending assistance to the Lao PDR, includingADB-administered trust unds, amounted to$643 million – 23 loans o $391 million; 25 grantso $203 million; and 81 technical assistance (TA)grants o $49 million. Agriculture received thelargest share o total ADB nancing amountingto $109 million (17%), ollowed by energy with$106 million (16%) and transport with $103million (16%). ADB has approved substantialamounts o ADB assistance or water supplyand other municipal services ($78 million,12%); education ($70 million, 11%); and health($66 million, 10%).
The overall perormance rating, determined by aggregating the perormance ratingso individual sectors and crosscutting areas or the study period is
. Theperormance o ADB assistance is
in strategic positioning;
inprogram relevance; and
in achieving outputs and outcomes,
inachieving outcomes and institutional development,
in development impact. All the evaluated sectors ollow a closely similar pattern, withmost criteria (excepting eciency) showing good perormance. It should be notedthat the low eciency was mainly because o the chronic implementation delaysacross sectors, refecting weak implementation capacity in executing agencies andcomplexity in the design o some projects. The risks linked to weak recurrent costunding or operation and maintenance, the weak domestic revenue base, and high aiddependency still persist.
Lao People’s Democratic Republic: Sustainable Growth and Integration
Since 2006, farmers have increasingly grownniche products that fetch desirable pricesabroad, for example organic cabbages shippedto Thailand, thanks to the ADB supportedSmallholder Development Project in Lao PDR.