Country profile

Lao PDR is a landlocked country of 6 million with low population density and high ethnic diversity.  It is one of Asia’s poorest countries, with 27% of the population living on less than a dollar a day and 74% below two dollars a day.  Eighty percent of the population lives from agriculture, but the country faces continuing food security problems, with seasonal rice shortages in some areas.  Infrastructure links remain poorly developed.  Despite these challenges, Lao managed 7% economic growth in 2008 through a successful programme of reforms, although growth has now slowed as a result of the global financial crisis. 
 

Lao PDR is on track to achieve its MDGs for poverty reduction, gender equality and disease control, but still faces serious challenges on hunger and primary enrolment, with 30% of school aged children out of school.  The national development agenda is set out in the 10-year socio-economic development strategy (2001-2010), which is linked to a public investment programme.  There is also a Strategic Plan on Governance 2006-2010. 
 

ODA amounted to US$364 million in 2006, which was 70% of the Lao public investment programme.  ADB, Japan and the World Bank were the largest donors.  The government and 23 development partners signed the Vientiane Declaration on Aid Effectiveness in 2006, and have since development an Action Plan to support implementation.  The government has issued a Decree on the Management and Utilisation of ODA, which assigns responsibilities for aid coordination.  It has also established a National Round Table process for dialogue with donors, together with a structure of eight sectoral working groups to improve coordination.  Overall, however, the country still faces major challenges in implementing the aid effectiveness agenda.  There has been little progress on improving the reliability and use of country systems, predictability of aid is low, and only 9% of assistance is provided in the context of programme-based approaches. 
 

Lao PDR did not participate in the first round of Paris Declaration monitoring, so the 2008 survey sets the baselines and targets.