FiinGroup: Vietnam is hopeful to achieve BBB- credit rating goal by 2025

DNHN - FiinGroup says that S&P Global Rating has recently upgraded its long-term credit rating on Vietnam to BB+, with this stable outlook, is a good sign that can fuel the country’s hope of achieving its target of BBB- sooner than the set goal of 2030.

Recent years have seen the Vietnamese Government make every effort to improve the national credit rating. Deputy Prime Minister Le Minh Khai on March 31 signed a decision to approve a project aimed at improving the national credit rating by 2030.

Through the project, the country is seeking to achieve a credit rating of BBB-, for both S&P and Fitch, and Baa3, for Moody's, or higher by 2030. Financial experts believe that the Government’s determination to improve this ranking will open up new development paths for its economy as well as the domestic business sector, especially in terms of capital costs and indirect investment capital flows into the country.

S&P last upgraded the Vietnamese credit rating to BB in April 2019, and most recently it continued to raise the Southeast Asian economy’s long-term rating to BB+, with a stable outlook in May of this year. This move, according to FiinRatings, reflects the positive view of a leading global credit rating agency for Vietnam in the international capital market amidst continued gloomy prospects for the global economy in the post-COVID period and the impact of the ongoing Russia-Ukraine conflict.

Truong Hung Long, director of the Department of Debt Management and External Finance under the Ministry of Finance, said the credit rating upgrade by S&P indicates the international community’s appreciation of the country’s efforts in stabilising and restoring the macro-economy.

The credit rating upgrade has the potential to have an uplifting impact by creating a spillover effect for the entire economy, in a way that helps the Government expand capital mobilisation channels for development investment at a reasonable cost, notes Long.

In its report, FiinRatings assesses that the upgrade to BB+ is a good sign as it will contribute to making the country’s BBB- credit rating target by 2030 much more feasible. It even says if the criteria continue to improve, Vietnam is likely to reach this target by 2025.

However, along with fundamental internal changes to the Vietnamese economy, FiinRatings suggests additional work should be done in order to achieve this target sooner.

The firm says the country should seek to strengthen the transparency of information and data on economics and finance, both in terms of quantity and quality. It should also strive to improve the quality of external debt data, which is said to remain inconsistent and have some errors.

Furthermore, there have also been suggestions made that Vietnam further improve its policies and institutions, including the State Bank’s ability to support the economy in the face of economic and financial shocks. In addition, the firm says the Government should closely monitor the potential debt risk in the banking system, which is now at a moderate level, explaining its credit scale compared to GDP is at a large level compared to the national development scale.

Source Baoquocte