Moody’s upgrades Vietnam outlook to positive from negative

, Moody’s upgrades Vietnam outlook to positive from negative
  • Moody’s Raises Vietnam Outlook to Positive on Fiscal Vigor.
  • Private economists expect Vietnam’s economy to grow 7.5% this year.
  • Visit Vietnam Insider’s homepage for more stories.

Moody’s Investors Service raised its outlook for Vietnam to positive from negative and affirmed the country’s long-term credit rating at Ba3, citing fiscal consolidation and an improving economy,  Bloomberg reported.

“The drivers of the positive outlook include signs of improvements in fiscal strength and potential improvements in economic strength that may strengthen Vietnam’s credit profile over time,” Moody’s said in a statement Thursday.

Vietnam’s Communist Party Chief Nguyen Phu Trong last month signaled the country would continue its push for strong growth and maintain an anti-corruption campaign as the party approved a plan to double per-capita gross domestic product in five years. Parliament has set an official target of 6% growth this year, but the government hopes to push it as high as 6.5%.

“Vietnam shall continue to pursue policies that ensure macro-economic stability, improve economic competitiveness,” the Ministry of Finance said in an emailed statement in response to the Moody’s move.

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Private economists expect Vietnam’s economy to grow 7.5% this year, according to a Bloomberg survey.

“Vietnam’s economic strength may benefit from global shifts in production, trade and consumption following the coronavirus pandemic,” Moody’s said. Improvements in fiscal and debt metrics should be “only briefly interrupted by the pandemic.”

In December 2019, Moody’s changed the outlook on Vietnam’s credit rating to negative, reflecting concerns around administrative deficiencies that had led to the delayed payment of an indirect debt obligation.

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Moody’s now assesses that guaranteed debt payment management practices have been strengthened within the administration, with greater scrutiny to the range of guaranteed debt payments coming due.

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The government monitors a full list of direct and indirect debt obligations and has instituted an administrative process whereby relevant ministries set aside funding in advance to fulfill these obligations.

With a coordinated focus on ensuring that the payments are planned for and processed promptly, Moody’s assesses that the risk of renewed delays has diminished.

Moody’s will continue to assess the practices and systems the government has instituted or is instituting, for timely payment of guaranteed obligations.

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