Recent developments in Laos’ economic environment have important implications for financial reporting, particularly for entities using Lao Kip as their functional currency. Previously, these entities were required to apply IAS 29 due to the hyperinflationary status of the Lao economy. The reporting requirements have now changed, rendering this update crucial for these entities.
According to recent data from the Bank of the Lao PDR, the three-year cumulative inflation rate fell below 100% as of October 2025. Furthermore, IMF forecasts indicate that this downward trend is expected to continue through 2026 and 2027.
As a result, the Lao economy is now considered to have ceased being hyperinflationary. Accordingly, entities should discontinue applying IAS 29 for reporting periods ending on or after 31 December 2025. The amounts in the financial statements immediately preceding cessation of hyperinflation will be used as the carrying amounts in subsequent financial statements.
Below are two example scenarios, and their related accounting implications, for the cessation of hyperinflation:
- Scenario A: The entity prepares annual financial statements, and the last reporting period in which IAS 29 was applied is 31 December 2024 (prior-year FS).
- Scenario B: The entity submits reporting packages to a parent entity whose presentation currency is not Lao Kip, and the period ending 30 September 2025 (Q3 reporting) was last period in which IAS 29 was applied.
