Moody's

Moody’s decision in upgrading the country’s outlook by two ranks from negative to positive is “unprecedented” since the Covid-19 outbreak, stated Vietnam’s Finance Ministry.

The drivers of the positive outlook include signs of improvements in fiscal strength and potential improvements in economic strength that may strengthen Vietnam's credit profile over time.

Moody's rating action concludes the review for downgrade initiated on April 7, 2020.

An upgrade is unlikely, given the review for downgrade.

Prospects of foreign investment will dim in 2020, given the impact of the coronavirus outbreak on investment sentiment globally, and this will make it more difficult for Vietnamese banks to raise external capital.

The magnitude of the impact of the coronavirus outbreak will depend on the length of disruptions, which is hard to predict, Moody’s noted.

In 2020, the credit growth is expected to be in range of 13 – 13.5%, down from 13.7% last year.

Vietnam is capable of repaying debts, as the annual debt repayment accounts for 15 – 16% of total state budget, below the ceiling limit and international practice of 25%.

By the end of 2020, all commercial banks are required to meet Basel II standards, a condition for local lenders to expand their respective credit growth limit and increase registered capital.

Delay in paying government debts was due to the lack of seriousness of related government agencies in following the instruction of the prime minister.