Borrowers are often unable to promptly repay their loans from microfinance institutions, putting many credit providers in Laos in

financial difficulties, according to an expert in the field.

    Ms Ursula Hammerich said on Thursday the microfinance bodies she had worked with had a 17 percent delinquency rate, which

was higher than the normal 5 percent. This problem needed to be addressed.

     Loan repayment delay is the main reason why microfinance institutions suffer financial constraints and are unable to provide

more loans to other people. It can even cause them to go bankrupt if borrowers continue to delay repayment.

     Ms Hammerich, who is project coordinator of the Catalyzing Microfinance for the Poor project, said the project had been set up

with the aim of training officials how to address the problem of loan repayment delays.

     The Bank of the Lao PDR and the Asian Development Bank are funding the project, which also aims to increase capacity

building for the staff of registered and licensed microfinance institution in Laos .

     Ms Hammerich was addressing a training course in loan management and delinquency management hosted last week by the

project for finance officials working in Vientiane and in Vientiane province

     The overall objectives of the training are to identify the main aspects of effective loan management, to become familiar with

processes and techniques to mininise delinquency, and to identify practical actions to improve loan management and reduce

delinquency.

     The training also aims at fostering understanding of the causes and costs of delinquency and how to control and manage it.

    A similar workshop will be held in Luang Prabang province from September 15 to 17 and in Savannakhet province from 22 to 24.

     Ms Hammerich said microfinance staff needed the right skills to deal with people who wanted to delay repayment of their loan.

They must bear in mind that whatever the crisis - whether flood or drought - borrowers must pay back the money to credit providers

so they could sustain their business.

     She explained that even if farmers lost their crops, microfinance staff must visit borrowers and encourage them to return the

money they owed as soon as they could.

     Ms Hammerich said microfinance institutions were growing in Laos and this would benefit the development of the economy.

But, she stressed, microfinance officials needed to have better skills so they could run the business effectively.

     She said the central bank had drawn up a regulation for microfinance institutions, which would allow business operators to

establish and list a money-lending service.