Development Challenge 

Despite strong growth and poverty reduction over the past two decades, Lao PDR faces a widening gap between its development ambitions and its ability to plan and finance them effectively. A convergence of macroeconomic fragility, rising debt, inflation, and external shocks—including COVID-19 —has driven a prolonged downturn. The economy remains resource-dependent with weak domestic revenue mobilization and underinvestment in human capital, compounded by fragmented planning and budgeting systems and limited institutional coordination. Together, these challenges undermine the government’s capacity to translate national priorities into well-financed, inclusive, and resilient development outcomes, underscoring the need for more integrated, evidence-based, and adaptive planning and financing systems—at the core of what the National Planning and Financing for Inclusive Development (NPFID) project seeks to address. 

NPFID directly addresses three core bottlenecks in Lao PDR’s national planning and financing systems: (1) weak linkages between national development planning and budgeting at both central and sub-national levels, (2) fragmented systems for monitoring and reporting on policy implementation and financing effectiveness, and (3) lack of operational alignment between the planning and financing cycles. The project provides strategic support to reinforce institutional capacity, strengthen the integration of planning and financing, and operationalize key reform priorities outlined in the 9th and 10th National Socio-Economic Development Plans (NSEDP), the Financing Strategy, and the Smooth Transition Strategy for LDC Graduation.  

Project Background

The NPFID project supports the Government of Lao PDR in strengthening policy coherence and improving the integration of planning, financing, and development cooperation processes. UNDP contributed to the development of the 9th and 10th National Socio-Economic Development Plans (NSEDPs) by strengthening stakeholder consultations, supporting the development of financing strategies, and enhancing monitoring and evaluation frameworks. The project is also supporting a sustainability review of the Round Table Process (RTP) to identify opportunities to strengthen development cooperation, policy dialogue, and the alignment of Official Development Assistance (ODA) with national priorities and Lao PDR’s transition toward Least Developed Country (LDC) graduation.

To strengthen results-based governance, the project has supported the development of a tailored Results-Based Management (RBM) Framework and Handbook and delivered technical capacity-building for government officials on results-oriented planning, implementation, monitoring, and accountability. In parallel, UNDP is developing a digital dashboard for the 10th NSEDP to enable more systematic tracking of progress against national development targets and support data-driven decision-making.

Together, these interventions are strengthening institutional capacity for integrated planning and financing, improving coordination across government and development partners, and enhancing the use of evidence and results in decision-making. This is helping to ensure that national priorities are better aligned with available resources, development cooperation is more effective, and progress toward national development goals can be monitored and managed more effectively.