The fact that Vietnam’s credit ratings has been upgraded to Ba2 shows that Moody's assesses Vietnam's economic strength and resilience to external macro shocks better than other countries with the same credit rating. This also shows improved policy effectiveness of the country.
Moody's believes that the Vietnamese economy will continue to benefit from the restructuring of the global supply chain, diversifying exports, and the ability to attract FDI into the manufacturing and processing sector.
The upgrade also reflects Vietnam's solid fiscal foundation – supported by reasonably controlled borrowing costs, prudent fiscal policy management, and improved liquidity of the government debt portfolio.
This also reflects the Government's tendency to gradually switch from foreign concessional loans to mobilizing loans in the domestic market, with low costs and longer terms.
According to Moody's, the increasing competitiveness and deepening participation in the global value chain will help boost Vietnam's economic strength.
Specifically, the increased competitiveness in the manufacturing and processing sector of Vietnam represents a superior performance compared to other countries of the same ratings in the region, and has contributed to the increasing income of the people.
Vietnam's participation in many bilateral and regional trade agreements has affirmed its expanding position in the global value chain.
According to Moody's, these free trade agreements will help improve Vietnam's competitiveness for lower value-added goods, and at the same time, firmly consolidate Vietnam's position in the supply chain for high value-added technology products.
The effectiveness of Vietnam's fiscal policy implementation is recognized as one of the main factors contributing to the upgrade by Moody’s.
Specifically, the Government has implemented a medium-term budget and financial plan, focusing on mobilizing domestic capital from institutional investors with low cost and long term.
Along with that, a stable debt-to-GDP ratio which is lower than that of previous years and below the ceiling of 60% has been well maintained. Meanwhile, a flexible fiscal policy to support economic recovery and growth is still operated.
In fiscal policy making, the Government also focuses on providing fundamental solutions to address long-term challenges, such as improving adaptability to climate change risks, investing in vocational education and training to improve labor productivity and create jobs in higher value-added occupations. These are factors that are highly rated by Moody's.
The Ministry of Finance assessed that Moody's raising the national credit rating of Vietnam in the context of global fluctuations is very positive.
In the context of complicated international situation leading to more than 30 credit downgrades in the world in the first 8 months of the year, Vietnam is the only country in the Asia-Pacific region, and one of four countries in the world whose credit ratings has been upgraded by Moody's since the beginning of the year.
The Ministry of Finance will continue to coordinate with Moody's, other credit rating agencies as well as other international organizations to continue to have a complete and up-to-date assessment of Vietnam's credit profile.
Source: Moody’s, theleader
Compiled by VietnamCredit
Tag: vietnam’s credit ratings, vietnamcredit, credit ratings, upgraded ratings