KEY RATING DRIVERS
2. FDI inflows remained increasing in 2017 with total registered capital up about 40% from last year to USD21.3 billion, mainly coming from the manufacturing sector. Accordingly, Fitch estimated that Vietnam would remain among the fastest-growing economies in the Asia-Pacific region, and the fastest among the "BB" rated peers.
3. Vietnam's foreign exchange has improved with 2017 reserves rising to $ 49 billion from $ 37 billion by the end of 2016 due to large capital flows and a current account surplus.
4. Total government debt, according to Fitch, fell to 52.4% of GDP in 2017 from 53.4% in 2016 and government guarantees fell to 9% of GDP by the end of 2017. As a result, Vietnam's public debt (general government debt including guarantees) fell to 61.4% of GDP by the end of 2017 from 63.6% at the end of 2016, and remained below the allowable debt ceiling of 65% of GDP. Public debt is reduced thanks to the equitization proceeds. The privatisation ("or equitization") programme for 2016-20 aims to raise revenues of VND250 trillion.
According to Government Finance Statistics (GFS), general government debt is likely to fall further and to decline to under 50% of GDP by 2019, aided by proceeds under the privatisation (or "equitization") programme. The budget deficit in will narrow to around 4.6% of GDP from around 4.7% in 2017.
Although Vietnam has received positive reviews from Fitch, potential risks from the structural weaknesses in the banking sector, SOEs, HDI, ... may have a negative impact on the development of Vietnam's future if there are not right policy.