Today (Tuesday 12 December 2023), the International Finance Corporation (IFC) and the Bank of the Lao People’s Democratic Republic (PDR) strengthened their collaborative effort to boost green finance with the signing of a new cooperation agreement. The enhanced partnership aims to accelerate necessary reforms to develop guidelines and standards that will help attract the green capital needed to drive the country’s economy and create jobs, while promoting a greener and more livable planet.
Due to its dependence on climate-sensitive natural resources such as water, forestry, and agriculture, Lao PDR is particularly vulnerable to the impacts of climate change. To mitigate these impacts and achieve carbon-neutral status by 2050, the country has set a mid-term target of reducing greenhouse-gas emissions by 60 percent by 2030. Meeting this target is expected to require almost $4.8 billion in mitigation measures by 2030, as outlined by Lao PDR’s National Determined Contribution, and the majority of these funds are expected to come from the private sector.
Vathana Dalaloy, Deputy Governor of the Bank of the Lao PDR, commented: “The financial sector holds significant potential in directing funds towards green projects and contributing to national environmental objectives, with the Bank of the Lao PDR playing a key role in leading the financial sector in this direction. IFC’s further assistance will allow us to foster a policy and regulatory environment conducive for all financial institutions to cultivate widely accessible green finance products in the local market.”
The effort to green the financial sector began over a year ago with a market readiness assessment to review the current landscape for green finance in Lao PDR and inform the way forward. Now, with IFC’s support, the Bank of the Lao PDR will develop a sustainable finance policy framework, establish standards and guidelines for green lending and issuance of thematic bonds, and build the capacity of regulators and market participants.
Thomas Jacobs, IFC Country Manager for Viet Nam, Lao PDR, and Cambodia, said: “Globally, central banks are promoting the green finance agenda and it is great to see the Bank of the Lao PDR facilitating sustainable finance reforms in the country. Given IFC’s global experience, IFC is uniquely equipped to assist the Lao financial sector to mobilize private sector capital towards climate-friendly projects with innovative financing solutions including green bonds.”
IFC has been working in Lao PDR since 1998 and is committed to supporting the country’s development agenda through assisting private sector development, promoting sustainability, and creating job opportunities.
