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Govt appoints taskforce to address fuel crisis, skyrocketing prices, foreign currency shortfall

The government has formed a new taskforce to address the fuel crisis, the spiralling price of consumer goods, and dwindling foreign currency reserves.
Prime Minister Phankham Viphavanh on June 6 signed a decision appointing the eight-member taskforce, which is chaired by the Deputy Prime Minister in charge of economic affairs, Dr Sonexay Siphandone.
Minister of Finance Bounchom Ubonpaseuth is vice chairman, while senior representatives of key ministries and sectors make up the rest of the taskforce.
The move comes as Laos battles a damaging fuel shortage in the wake of the depreciation of the kip. The unfavourable exchange rate between the kip and the US dollar and Thai baht has meant that importers are unable to purchase adequate amounts of the foreign currencies needed to buy sufficient quantities of fuel, whose price on the global market continues to rise.
The kip has suffered its biggest loss in value against the baht and dollar since the Asian financial crisis in 1997-1998. The kip has plunged to its lowest value in decades due to a supply-demand mismatch.
BCEL exchange rates on June 14, 2017, saw US$1 buy 8,216 kip and sell for 8,256 kip, and one baht buy 242.93 kip and sell for 244.74 kip. In contrast, on Tuesday, US1$ bought 14,290 kip and sold for 14,322 kip, with one baht buying 495.24 kip and selling for 498.97 kip.
For weeks, motorists in Laos have been forced to queue up in long lines to get small quantities of fuel at petrol stations, which tend to remain open for short periods of time because supplies soon run dry.
It has been stated that the Russia-Ukraine conflict has resulted in a volatile global fuel market, which has heightened geopolitical uncertainty and affected the price of consumer goods in Laos, exacerbated by the continuing Covid pandemic.
The price of fuel surged by 11.4 percent month-on-month (with regular grade petrol rising by 5.1 percent and diesel by 15.7 percent) and 86.3 percent year-on-year (regular grade petrol rising 72 percent and diesel 96.6 percent).  
Rising oil prices and the continuing depreciation of the kip have driven up the rate of inflation, with Laos now posting one of the highest inflation rates in Southeast Asia.
The year-on-year inflation rate surged to 9.9 percent in April, the highest figure recorded since January 2016, according to the Lao Statistics Bureau.
The consumer price index also jumped at its fastest pace in recent months, putting a further squeeze on consumers, who are having to pay more for food, fuel and other essentials.
The newly-appointed taskforce is mandated to devise measures to ensure adequate amounts of fuel can be imported.
The taskforce has also been entrusted to formulate measures to stabilise the supply of foreign currency, while also managing exchange rates and exchange shops to ensure their operations are in accordance with the regulations. The taskforce was told to investigate and enforce the penalties imposed on individuals breaking the law, undermining social order, and damaging national finances and the economy.
The government instructed the taskforce to draw up measures to regulate the price of goods and also define strategic goods. 

By Souksakhone Vaenkeo
 (Latest Update June 8, 2022)

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