Deputy Prime Minister and Minister of Finance, Mr Santiphab Phomvihane, outlines proposed amendments to the Law on the State Budget.

Govt eyes use of State Reserve Fund to generate income

The government has recommended that up to 40 percent of the State Reserve Fund be used for investment purposes, as part of proposed amendments to the Law on the State Budget.
Deputy Prime Minister and Minister of Finance, Mr Santiphab Phomvihane, presented the proposed amendments during the ongoing Extraordinary Session of the 10th National Assembly on Thursday, saying the changes would strengthen macroeconomic stability, improve the country’s financial resilience, and support sustainable economic growth.
One of the most significant amendments proposed concerns Article 12, which governs the State Reserve Fund. The amendment would allow the government to invest up to 40 percent of the fund in cash deposits and gold and bond purchases to generate returns, while maintaining the fund’s stability.
According to an impact assessment report presented to National Assembly members, the current State Reserve Fund has generated no financial returns because it has remained largely inactive.
The proposed amendment would transform it into a financial asset capable of earning income while remaining available to support development and safeguard economic stability.
A draft of the revised law states that the State Reserve Fund consists of currency, valuable assets, annual budget allocations, budget surpluses and revenue collected in excess of targets, as decided by the government.
The government would manage the fund, while the National Assembly would continue to approve withdrawals following government recommendations.
In urgent or emergency situations, the Prime Minister would be able to authorise withdrawals before seeking approval from the National Assembly. The government would also report investment activities involving the reserve fund to the Standing Committee of the National Assembly.
Presenting the draft of the revised law, Mr Santiphab said the Law on the State Budget is fundamental to managing public finances and ensuring that state revenue and expenditure are handled accurately and efficiently.
The law has been revised to reflect changing economic conditions since it was first enacted in 1994, with changes made in 2006, 2015 and 2021.
The latest proposed revision comprises 97 articles grouped into 11 parts and 14 chapters. They include one new part, 78 revised articles, 10 unchanged articles, and 9 new articles.
Mr Santiphab said the changes are necessary to align the law with the revised Constitution, related legislation, and the National Socio-Economic Development Plan. They also reflect the recent restructuring of government following the merger of the former Ministry of Planning and Investment into the Ministry of Finance.
The revised law would bring Laos’ public financial management closer to international standards, strengthen accountability among budgetary agencies, and improve the country’s financial capacity, he added.
The draft of the revised law also proposes that all state budget revenue and expenditure, including every state fund, be managed through a single state treasury system. The government believes this would improve financial oversight, reduce budget losses, and strengthen control over public spending.
The amendments also address the management of Official Development Assistance, particularly for projects involving goods or activities managed directly by development partners that have previously been difficult to audit.
Under the proposed amendments, all grant assistance would be managed under state budget regulations through the central treasury.
In addition, fee and service revenues would be reclassified as non-tax revenue to align Laos’ public finance system with international practice.
The government said the changes would improve the country’s international credit standing while helping to plug loopholes that have contributed to budget losses and off-plan debt.
If approved by the National Assembly, the amended law will provide a stronger legal framework for managing state finances, clarify the responsibilities of government agencies, and improve the efficiency, transparency and accountability of budget management.

By Phonepaseuth Volakhoun
 (Latest Update July 10, 2026)