Lao PDR is adopting key policy reforms to make its strong economic growth benefit more people, especially the poor and disadvantaged, while protecting the environment, supported by a new US$38.6 million credit which was approved today by the World Bank’s Board of Executive Directors.

The country’s First Programmatic Green Growth Development Policy Operation aims to establish the foundations for ‘green growth’ planning and strengthen environmental protection and resilience to climate change in Lao PDR.

“Green growth is cleaner, more resource-efficient, and more resilient to risks such as climate change,” said Dr. Kikeo Chanthabouly, Vice Minister of Planning and Investment for Lao PDR. “This development policy operation is closely linked with the strategic priorities of the Government of Lao PDR’s 8th National Socio-Economic Development Plan, and can help to sustain strong economic growth while also protecting the environment and human health.”

The program has three priorities: reducing risks to prudent economic management; integrating principles of ‘green growth’, environmental protection, and resilience into development planning; and promoting sector-specific transformative initiatives, such as for managing water resources, forest use, and pollution. To address risks to the economy, the operation will aim to strengthen fiscal sustainability and financial sector stability. Some of the program’s goals include establishing a system of national parks, stopping the use of harmful chemicals and pesticides, and strengthening control of illegal logging. 

“The World Bank is pleased to partner with Lao PDR as it shifts to green growth,” said Ulrich Zachau, World Bank Country Director for Southeast Asia, “Green growth can generate new opportunities for the Lao people, by creating jobs in new industries that depend on environmental quality, such as eco-tourism or production of green agricultural products. Green development will also help reduce exposure to air and water pollution, benefiting the health of adults and children alike.”  

Climate change is an increasing concern in Lao PDR, where forest cover has declined from 70% in 1940 to around 40% of the territory in 2010. Growing pressures on the environment take a toll on the economy, with losses from natural disasters – expected to be exacerbated by climate change – are estimated at approximately 3 to 4% of GDP. 

The ‘green growth’ initiative is part of the World Bank’s new Country Partnership Framework for Lao PDR.  The new framework for 2017 to 2021 outlines the approach of the continued partnership, which includes as a key priority the protection of the environment, through more sustainable management of natural resources and enhanced resilience to disaster risks and climate change.

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