Laos Regulatory Update | Unapproved international borrowing may attract a fine equal to 10% of the loan

Decision on the Management of International Borrowing No. 707/BOL, issued on 5 August 2026.

I. Summary

On 5 August 2026, the Bank of the Lao PDR issued Decision No. 707/BOL to regulate and supervise international borrowing by individuals and legal entities in Laos, align foreign debt with socioeconomic development and preserve monetary stability.

The Decision covers both direct and indirect borrowing:

• Direct borrowing includes making or receiving loans.
• Indirect borrowing includes issuing offshore bonds, trade credit and guarantees.

Commercial banks and non-bank financial institutions are excluded from its scope.

The Decision imposes strict conditions. Individuals and enterprises making direct loans abroad must demonstrate secure and reliable foreign currency funding sources; those funds must not themselves derive from borrowing.

International borrowing is also subject to ceilings or financial ratios:

• Individuals may borrow up to USD 300,000.
• Enterprise borrowing is subject to the applicable debt-to-equity ratio requirements, depending on the currency of the enterprise's income.

Loans exceeding USD 100 million require an independent audit.

All direct or indirect international borrowing requires prior approval from the foreign exchange management authority.

Applications must include detailed financial plans, contracts and, for major projects, the required National Assembly approval documents.

Approved borrowers and commercial banks must conduct transactions through designated bank accounts, comply with specific foreign exchange conversion rules and submit monthly reports.

Violations may attract penalties including substantial fines and prohibition or rejection of future borrowing applications.

II. Brief commentary

The Decision creates strict operational compliance requirements, particularly concerning the route through which funds move.

Borrowers must use specifically designated or approved bank accounts when receiving and repaying overseas loans.

They must also convert at least 10% of incoming loan funds into Lao currency, except for loans used for debt restructuring. This directly affects corporate foreign exchange management strategies.

Commercial banks are assigned a frontline oversight role. Before processing international borrowing transactions, they must verify that approval has been obtained from the Bank of the Lao PDR and implement the applicable currency conversion requirements.

The framework therefore also increases commercial banks' own compliance responsibilities and risks.

The Decision introduces monthly reporting by borrowers and strict penalties for non-compliance. For example, international borrowing without approval may attract a fine equal to 10% of the loan amount.

Repeated failure to submit required reports may also result in the withdrawal or denial of eligibility for future international borrowing.

Businesses should therefore establish robust internal tracking, registration and periodic reporting systems covering all their international financing and financial obligations.