Laos faces unprecedented financial difficulties, including US$14.5 billion worth of public and publicly guaranteed debt—around half of which is owed to China. But unlike Sri Lanka, there is no chance that Laos will default on its external debt obligations. China, its largest creditor and politicalally, will not let Laos default. Strong China–Laos relations mean that the debt trap narrative is not accurate. China’s experience as a major international creditor, and a sense of urgency within Laos itself, will be what determines whether or not Laos successfully navigates its severe economic and financial situation.
Professor Nishizawa’s research fields include financing for development, Public-Private Partnerships (PPPs), sovereign debt, and debt sustainability issues.