Credit rating agency Moody's Investors Service ("Moody's") has announced the maintenance of Vietnam's national credit rating of Ba3 for domestic and foreign currency issuances and unsecured premium loans, and revised its outlook to the negative level, ending the time to put Vietnam's credit records in the downgrade tracking list from October 9, 2019. The Ministry of Finance immediately released a statement on this issue.
Specifically, in the announcement of the Ministry of Finance, the basis for Moody's to make decisions to reduce Vietnam's credit outlook stems from the perception that there are still potential risks, though not significant, of the delayed repayment of indirect debt obligations of the Government in the absence of clear solutions to improve coordination between relevant agencies, as well as enhance transparency in debt management guaranteed by the Government.
According to the Ministry of Finance, Moody’s downgrading Vietnam's credit outlook based on a separate incident to the Government's contingent liabilities, while ignoring the comprehensive achievements of Vietnam in socio-economic development, improved ability to cope with external shocks, and improved sustainability of the public debt portfolio, is unwarranted.
In the statement, Moody's noted that with the focus on supervision and coordination to ensure the repayment obligations are arranged and the timely payment procedures, the risk of recurrence of delayed repayment has been significantly relieved.
However, the Ministry of Finance acknowledged that Moody's signal of continuing to monitor Vietnam's credit profile (with Negative outlook) was not commensurate with the drastic and timely guidance of The Government, as well as a series of measures that the Government, the Ministry of Finance, and relevant agencies have implemented in recent years to improve the administrative coordination in the settlement of contingent liabilities of the Government ensuring that there is no loss to the lender.
The Ministry of Finance also affirmed that Vietnam always seriously fulfills its debt repayment obligations on time as committed to development partners and international financial institutions. This view is also made clear by the government's active implementation of the guarantor's responsibility for payment, even if the Lender has not received a formal request.
According to the Ministry of Finance, in order for the Government to guarantee that the late repayment of debts will not arise in the near future, causing an unnecessary misunderstanding to the community of investors about the Government's ability to repay debts, as well as affecting Vietnam's prestige and national image in the international arena, the Prime Minister has directed the Ministry of Finance, relevant ministries, branches, and agencies to ensure the arrangement of sources and fulfillment of due debt repayment obligations.
In the coming period, the Ministry of Finance emphasized that Vietnam will continue to pursue the goal of solidifying the macro-economic foundation, enhancing the internal capacity of the economy, promoting institutional reform and allocating resources to ensure debt solvency, sustaining public debt and national financial security while ensuring resources for development.
Accompanying with the Government, besides continuing to implement economic reform solutions, the Ministry of Finance and relevant agencies in the near future are ready to provide transparent information and provide convincing evidence on the Government's serious fulfillment of debt repayment commitments.
"Accordingly, the Ministry of Finance believes that Moody's, other credit rating agencies as well as other international organizations will have sufficient information and authentic basis to provide a correct and positive view on credit records of Vietnam,", according to a statement issued by the Ministry of Finance.
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