Home » Banking & Finance » Vietnam aims to lift sovereign credit rating

The Ministry oVietnam aims to lift sovereign credit ratingf Finance has submitted a scheme to the Prime Minister for improving Vietnam’s sovereign credit rating to achieve investment grade by 2020.

Currently, the country maintains credit ratings from Standard&Poor’s, Moody’s and Fitch Ratings. S&P gives the country an overall rating of BB-, while Moody’s rates it B1 and Fitch gives it a B+ rating, all three or four levels below investment grade.

Under the proposed scheme, the ministry highlights measures relating to institutional and economic management that include boosting social welfare policies to narrow the gap between rich and poor and among regions of the country.

Next, measures will be undertaken to ensure sustainable growth and development, including restructuring of public investment, State-owned enterprises, credit institutions and the stock market. The Government will also tighten fiscal policy to reduce the State budget deficit to 4.5 percent of GDP by 2015 and 4 percent by 2020.

Monetary policy will be more closely coordinated with market signals to control dollarization of the market and a flexible foreign exchange policy will put the priority on curbing inflation, reducing the trade deficit, ensure the international balance of payments, and stabilizing the economy.

Finally, public debt will be managed through an improved legal framework and debt management tools.

Standard Chartered, with its significant onshore presence, will provide experienced local insight to the rating agencies and the broader investor community on behalf of the Vietnamese Government, according to a statement on the bank’s website. It will also share its experience and give recommendations to Vietnamese agencies concerning provision of information to rating agencies in order to achieve optimum credit ratings.

The sovereign credit rating is an important indicator for international investors and a tool for determining a country’s borrowing cost in international capital markets. Improvement of sovereign credit ratings can also help a country attract greater foreign investment.

VNA/VOV online

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