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The only country that has been simultaneously upgraded to positive by three agencies

In 2020 and in 2021, Vietnam's economy faced numerous challenges due to the Covid-19 pandemic. In that context, the Government of Vietnam has flexibly administered economic development policies, thereby, maintaining the macroeconomy, ensuring positive economic growth, and the safety of the national financial system. As a result, in 2021, Vietnam is the only country in the world that all three credit rating agencies simultaneously revised its outlook to positive.

The great news began in March, when the credit rating committee Moody's decided to keep the national credit rating unchanged and increase the credit outlook of Vietnam by two levels to positive.

The two-level upgrade of Vietnam's outlook is unprecedented in the credit rating of this organization globally since the Covid-19 pandemic. After that, Fitch Ratings announced it kept Vietnam's credit rating at BB, raising its outlook from Stable to Positive. Along with Moody's and Fitch Ratings, the credit rating agency S&P Global Ratings (S&P) also announced that Vietnam's national credit rating will remain unchanged, raising the outlook from Stable to Positive.

According to the Ministry of Finance, this shows the confidence of credit rating agencies in the effective policy management of the Government, strong growth prospects as well as increasingly solid fiscal space of Vietnam.

According to financial expert Can Van Luc, one of the reasons for Vietnam to achieve the above results is that the country has been actively restructuring the financial - banking system, ensuring a healthier banking system and capital adequacy, strengthening risk management in accordance with Basel 2 standards, and improving the credit rating.

“Along with that, improving public finance through sustainable fiscal consolidation, stabilizing debt in the medium term, reducing public debt and budget deficit are also positive factors, recognized by rating agencies," said Can Van Luc.

Efforts to keep ranking and improve credit rating

The elevation of Vietnam's credit outlook affirms the appreciation of credit rating agencies for the success of the Government of Vietnam in drastic management to realize the “dual goals”: both effective prevention and control of the Covid-19 pandemic, while recovering and developing the economy. This is also thanks to the efforts of the Ministry of Finance and other ministries and branches under the drastic and consistent direction of the Government and the Prime Minister in raising the national credit rating.

According to Truong Hung Long, Director of the Department of Debt Management and External Finance (Ministry of Finance), as Vietnam has become a middle-income country and will gradually depend more on commercial loans, the elevation of the national credit rating is a very positive sign.

On the one hand, it contributes to improving the reputation of the country, while on the other hand, increases the confidence of international investors, both direct and indirect investors.

Regarding Vietnam's achievements, economic expert Dinh Trong Thinh said that maintaining the credit rating is difficult because, in reality, it is very easy to upgrade or be downgraded.

Keeping this index depends not only on production and business factors, but also requires accompanying factors related to growth and development such as institutional reform, administrative reform and debt repayment.

“Controlling public debt as well as controlling institutions and other factors is important in credit rating. Fortunately, although the pandemic has affected revenue, we have ensured that we have overspending and public debt within allowable limits," said expert Dinh Trong Thinh.

In the context of the pandemic, geopolitical risks, unpredictable trade and wars, expert Can Van Luc recommended many solutions that Vietnam needs to implement to keep its ranking and improve its credit rating in the near future.

In addition to consistently implementing "dual goals", Can Van Luc said that it is necessary to continue to coordinate smoothly and synchronously between fiscal and monetary policies to maintain macroeconomic stability, control inflation, and continue to increase appropriate foreign exchange reserves, maintain a high level of economic growth, increase per capita income and human development indicators.

“At the same time, it is necessary to further improve public finance through sustainable fiscal consolidation and stabilization of the Government debt in the medium term, speeding up the progress of budget restructuring, sharply reducing the budget deficit, especially expanding the tax base,” Can Van Luc said.

The Government of Vietnam will continue to pursue the goal of strengthening the macroeconomic foundation, maintaining stable growth, improving the internal capacity of the economy, and accelerating institutional reform in parallel with the task of preventing and controlling the Covid-19 pandemic to continue to create a solid foundation for the implementation of the country's medium and long-term goals and improve the country's credit status.