Lao People's Democratic Republic Climate Change Institution Assessment (CCIA) (English) 2026

JUNE 2025 Acknowledgements This report was prepared by the World Bank under the ThirdPublic Financial Management Reform Program for the LaoPDR, financed by the European Union and Australia. The teamcomprised Abel Bove (Senior Public Sector Specialist and mainauthor),Elena Georgieva-Andonovska(Senior Public SectorSpecialist,task team leader and co-author),ViengmalaPhomsengsavanh(Public Sector Specialist,co-task team Contents Acknowledgementsi Abbreviations Executive Summary 43References Annexes Annex 1. Lao PDR Governance Indicators 2003-2023 46Annex 2. Climate Related Strategies and Plans Abbreviations CCDRPEFACCDR Country Climate and Development ReportPEFA Public Expenditures and Financial Assessment CCIAPFMCVAPIMDCCPMDRMPMOEPFGCFGHGSOEUNFCCCIFMISITMOLTESMAFM&EMICMOFMONREMPIMRVNANAPNCCSNDCNECNGGSNSEDPCCIA Climate Change Institutional AssessmentPFM Public Financial ManagementCVA Climate Vulnerability AssessmentPIM Public Investment ManagementDCC Department of Climate ChangePM Prime MinisterDRM Disaster Risk ManagementPMO Prime Minister’s OfficeEPF Environmental Protection FundGCF Green Climate FundGHG Greenhouse GasSOE State Own EnterpriseUNFCCC United Nations FrameworkConvention on Climate ChangeIFMIS Integrated Financial Management Information SystemITMO Internationally Transferred Mitigation OutcomesLTES Long-Term Emission StrategyMAF Ministry of Agriculture and ForestM&E Monitoring and EvaluationMIC Ministry of Industry and CommerceMOF Ministry of FinanceMONRE Ministry of Natural Resources and EnvironmentMPI Ministry of Planning and InvestmentMRV Monitoring, Reporting and VerificationNA National AssemblyNAP National Adaptation PlanNCCS National Climate Change StrategyNDC Nationally Determined ContributionsNEC National Environment CommitteeNGGS National Green Growth StrategyNSEDP National Socio-Economic Development Plan ExecutiveSummary The objective of the Climate Change Institutional Assessment (CCIA) is toanalyzethe institutional framework for addressing climate changechallenges, in the context of the preparation of the World Bank Country Climate and Development Report (CCDR) for the Lao PDR.The CCIA is adiagnostic tool that uses a standard methodologydeveloped by the WorldBank and applied in over 50 countries, to evaluate organizational readiness torespond to climate change. This CCIA for the Lao PDR was undertaken fromNovember 2024 to February 2025, in parallel with the CCDR. The CCIA focuseson four aspects of readiness: the relevance and implementation of the legal1 Laos is highly exposed to climate change because of its dependence onagricultureand hydropower exports,and the high proportion of itspopulation living in flood- prone areas.Key climate risks relate to risingheat, more erratic precipitation, and a higher frequency and severity of floods, The 2019 Prime Minister’s Decree on Climate Change is the foundation ofthe Lao climate legal framework, complemented by other legislation.TheDecree covers the main areas expected in a climate framework law accordingto international good practice, setting the principles of mainstreaming bothadaptationand mitigation in national development;defining policyinstruments(climate vulnerability assessments,greenhouse gas emission Coordination of the climate policy agenda is limited and fragmented. While MONREis in charge of climate policy coordination, there is currently no formal and active structure to engage all stakeholders, either at leadership ortechnical levels, for decision-making and accountability purposes. Reportingonclimate policy implementation is limited and the NDC Biennial Thelack of prioritization and the multitude of planning documentsrelated to climate change affect the credibility and implementation ofLao government strategies.While there is a plethora of climate-relatedstrategies, including the Green Growth Strategy, Climate Change Strategy, Current public financial management practices do not foster climatepolicy financing:(i) macro-fiscal forecasts do not consider climate changeimpact; (ii) the link between strategic plans and the budget process is weakand does not enable budget allocation according to development priorities or 1. Introduction and Background 1.The objective of the Climate Change Institutional Assessment (CCIA) is to analyzethe institutional framework for addressing climate change governance challenges,in the context of preparation of the World Bank Country Climate and Development Report (CCDR) for the Lao PDR.The objective of the CCDR is to analyze how Laos’development goals can be achieved in the context of mitigating and/or adapting toclimatechange.The CCIA is a diagnostic tool that uses a standard methodology,developed by the World Bank and applied in over 50 countries, to evaluate organizational3 2.In line with the 2023-24 World Bank guidance for the CCIA, the Lao PDR CCIA aimsto assess the institutional binding constraints to climate policy.These include the45 countrygovernance and instituti