The Bank of Lao unveiled its 2026 monetary policy plan to the National Assembly, setting a primary target of controlling inflation at 5% (plus or minus 2%), along with comprehensive financial stability measures.
The report, presented to the 10th General Assembly of the 9th National Assembly from November 10-21, 2025, showed impressive achievements, with the average inflation rate in the first 10 months of 2025 at 8.3%, steadily declining to 4.0% in October.
Mr. Bounkham Vorajit, Governor of the Bank of Lao, stated that this success is due to the implementation of an integrated monetary policy, including three reductions in the benchmark interest rate from 10.5% to 9% per annum, along with the development of a more open market for stronger monetary movement.
For 2026, the first year of implementing the resolutions of the 12th National Congress of the Party, the central bank has set three main targets: a stable inflation rate of 5% (plus or minus 2%), international reserves covering at least 5 months of imports, and non-performing loans (NPLs) not exceeding 3%.
The Bank of Lao will continue its integrated monetary policy, focusing on developing comprehensive policy tools and scientifically evaluating and reviewing the benchmark interest rate and reserve ratio based on prevailing circumstances.
Furthermore, the Bank of Lao will control the M2 money supply in line with economic growth, coordinate with relevant sectors to centralize the Treasury Account (TSA), and study the mechanisms for gold pricing and the price structure of commodities.
The Bank of Lao will continue its state-managed market exchange rate policy, setting an appropriate reference rate, improving and developing the foreign exchange market, and researching mechanisms for hedging against exchange rate risk.
Furthermore, performance in the first 10 months of 2025 shows that the average exchange rate of the Kip/Dollar depreciated by only 0.10% compared to the full-year average of 2024, while the spread between the bank’s exchange rate and the forward market rate narrowed to 0.62%.
This target demonstrates the central bank’s commitment to maintaining the stability of the country’s currency while promoting sustainable economic and social development in line with its vision of “Stable Kip, Strong Financial Institutions, Fast and Modern Services”.