The credit rating agency Fitch Ratings has revised Vietnam’s Outlook from ‘stable’ to ‘positive’ and affirmed Vietnam’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB’, the Vietnam’s Ministry of Finance said on May 9.
The Ministry of Finance said that the upgrade of Vietnam’s Outlook demonstrated Fitch’s recognition of the achievements and efforts made by the Vietnamese Government in improving the quality and efficiency of economic management.
According to Fitch, the Government of Vietnam has continued their commitment to curb and reduce debts, with government debt decreasing to 50.5% of GDP in 2018 from a peak of 53% in 2016. The agency also expects that the ratio will further reduce to 46% by 2020.
The country’s public debt (general government debt including guarantees) also fell to around 58% of GDP by the end of 2018 after being close to the ceiling at 65% in 2016, Fitch said.
Fitch stated that the debt reduction has been attributed to the decline in outstanding government guarantees, stable receipts from equitisation of state-owned enterprises, high nominal GDP growth and lower fiscal deficits.
The rating agency expects that Vietnam’s GDP growth will stand at around 6.7% in 2019, still within the National Assembly’s target of between 6.6-6.8%.
Despite impacts from US-China trade tensions and slowing global growth, Vietnam will remain among the fastest-growing economies in the Asia-Pacific region and in the global ‘BB’ rating category, Fitch said.
The agency also expects that Vietnam will remain an attractive destination for foreign investors thanks to its low cost advantage.