Econ
Fitch rated Vietnam at BB- with stable outlook
Fitch Ratings has announced the credit rating of long-term debt issued in foreign currency and local currency (IDRs) of Vietnam at BB-, with a stable outlook.
Local currency bond rating and foreign currency unsecured and ceiling prices in Vietnam are also at BB-, while the short-term IDRs reached B.
Ratings IDRs with stable outlook of Vietnam reflects the balance between stability and the prospects of the macro economy recently with high public debt, budget deficit is quite large and relatively weak structure.
Fitch predicts that 2015 budget deficit of Vietnam will reach 6% of GDP, down slightly from an estimated 6.2% of GDP in 2014 based on adjusted data. 2016 budget is currently being discussed in Congress.
Fitch also expects consolidated budget in 2016 will reach 5.4% of GDP, that is modest, mainly due to lower capital expenditures with expected budget deficit of the national budget will not change anything compared with 2015. However, Fitch does not anticipate a change in fiscal policy after conversion plan of central leadership in 2016.
Total government debt has increased by 7.3% of GDP in 2014, which is 42.8% higher than the average rate and increases BB compared with 42.3% in 2013. Fitch expected t otal government debt to rise to 49.3% of GDP in 2015 and to stabilize at around 50% as the government towards achieving the medium-term fiscal goal of reducing the budget deficit to 4% of GDP. The authorities said they would not seek to increase the debt ceiling to 65% of GDP.
Fitch affirmed the refinancing operations of Vietnam has a relatively low risk due to the balance between higher concessional resources and the volume of domestic debt increased from the bonds have maturities relatively short. Public debt in countries with average maturities of 4.3 years, while the maturity of the foreign debt is 12.8 years. Domestic bond yields have reached 5-year maturity by 6.7% in October 2015, 5.2% compared with the same period last year.
Vietnam is expected to complete the program of the International Development Association of the World Bank in late 2017, the program requires financing from the market in the future.
The main factors leading to positive action, both individual and collective, including:
1. Commitment to curb the budget deficit, helping government debt ratio to fall slightly.
2. Increasing the transparency of the level of risk and contingent liabilities swing
3. Banking reform has much more progress.
The main factors leading to negative activity of both individuals and groups, including:
1. A shift from the combination of macroeconomic policies with the aim of achieving macroeconomic stability, low inflation and stable, and balanced external.
2. Decreasing foreign reserves at destabilizing the economy
Main assumptions
1. Do not escalate disputes or geopolitical areas to disrupt the trade and financial flows
2. The world economic conditions are consistent with the World Economic Forecasts of Fitch.
Ratings IDRs with stable outlook of Vietnam reflects the balance between stability and the prospects of the macro economy recently with high public debt, budget deficit is quite large and relatively weak structure.
Fitch predicts that 2015 budget deficit of Vietnam will reach 6% of GDP, down slightly from an estimated 6.2% of GDP in 2014 based on adjusted data. 2016 budget is currently being discussed in Congress.
Fitch also expects consolidated budget in 2016 will reach 5.4% of GDP, that is modest, mainly due to lower capital expenditures with expected budget deficit of the national budget will not change anything compared with 2015. However, Fitch does not anticipate a change in fiscal policy after conversion plan of central leadership in 2016.
Total government debt has increased by 7.3% of GDP in 2014, which is 42.8% higher than the average rate and increases BB compared with 42.3% in 2013. Fitch expected t otal government debt to rise to 49.3% of GDP in 2015 and to stabilize at around 50% as the government towards achieving the medium-term fiscal goal of reducing the budget deficit to 4% of GDP. The authorities said they would not seek to increase the debt ceiling to 65% of GDP.
Fitch affirmed the refinancing operations of Vietnam has a relatively low risk due to the balance between higher concessional resources and the volume of domestic debt increased from the bonds have maturities relatively short. Public debt in countries with average maturities of 4.3 years, while the maturity of the foreign debt is 12.8 years. Domestic bond yields have reached 5-year maturity by 6.7% in October 2015, 5.2% compared with the same period last year.
Vietnam is expected to complete the program of the International Development Association of the World Bank in late 2017, the program requires financing from the market in the future.
The main factors leading to positive action, both individual and collective, including:
1. Commitment to curb the budget deficit, helping government debt ratio to fall slightly.
2. Increasing the transparency of the level of risk and contingent liabilities swing
3. Banking reform has much more progress.
The main factors leading to negative activity of both individuals and groups, including:
1. A shift from the combination of macroeconomic policies with the aim of achieving macroeconomic stability, low inflation and stable, and balanced external.
2. Decreasing foreign reserves at destabilizing the economy
Main assumptions
1. Do not escalate disputes or geopolitical areas to disrupt the trade and financial flows
2. The world economic conditions are consistent with the World Economic Forecasts of Fitch.
