People sit and drink coffee next to Vietnamese flags displayed above a sidewalk in Hanoi on August 28, 2024. (Photo by Nhac NGUYEN / AFP)
HANOI: Vietnam’s national credit rating is making significant strides toward achieving the official investment-grade ranking.
This was emphasised during a seminar titled National Credit Rating and Investor Relations organised by the Finance Ministry’s Department of Debt Management and External Finance and the German Development Cooperation Organisation (GIZ) last Wednesday in Hanoi.
At the seminar, the Director of the department Truong Hung Long noted that after more than two years of implementing the Project on Improving National Credit Rating for 2030, Vietnam has seen positive results.
This progress highlights the country’s ongoing efforts to enhance its creditworthiness and attract more foreign investment.
In the context of global economic fluctuations in 2022, many countries experienced significant instability due to geopolitical conflict, leading to downgrades from credit rating agencies.
However, Vietnam bucked the trend. Both Moody’s and S&P recognised Vietnam’s resilience, with S&P upgrading the country’s rating from BB to BB+ and maintaining a “stable” outlook, while Moody’s upgraded it from Ba3 to Ba2, also with an official “stable” outlook.
In 2023, Vietnam received another upgrade from Fitch, moving from BB to BB+ with a “stable” outlook.
This indicates that Vietnam is now just one level away from achieving the desired investment-grade rating according to S&P and Fitch and two levels away according to Moody’s.
Long emphasised the benefits of improving a national credit rating, noting its positive impact on the overall economy.
An enhanced credit rating strengthens the nation’s reputation and fosters trust among international investors, which is crucial for reducing the cost of mobilising foreign capital.
With the decline in official development assistance (ODA) and preferential loans to Vietnam, the importance of a strong national credit rating becomes more pronounced.
Arne Fraemk, head of the Project on Strengthening Public Financial Management under GIZ Vietnam, said that Vietnam was at a pivotal moment in its journey towards becoming a high-income country.
Securing alternative financial resources was increasingly urgent as ODA inflows decreased.
During the seminar, delegates also discussed the interconnected issues of credit rating and investor relations.
Head of global official organisations at Standard Chartered Bank, Karby Leggett, noted that now is an opportune moment for Vietnam to address its national credit rating.
The transition from a BB rating to a higher level could significantly reduce capital mobilisation costs, thereby attracting new investment and enhancing financial stability.
Leggett expressed confidence that Vietnam will meet its credit rating target by 2030, based on discussions with the government and data from credit rating organisations.
The optimistic outlook points to strong belief in Vietnam’s economic progress and financial stability in the coming years. — Viet Nam News/ANN
