In the current context, the affirmation demonstrates Vietnam's strong medium-term growth prospects and stable macroeconomic environment.
In addition, the maintenance of Vietnam’s sovereignty rating indicates lower government debt levels and easier accessibility to external finance compared with others.
The international rating agency also lauded Vietnam for having taken advantage of favourable economic conditions over recent years to consolidate its fiscal situation and foreign reserves, contributing to improving its resistance to macro risk.
The outlook revision from Positive to Stable reflects the widespread impact of the COVID-19 pandemic on the global economy, with its negative effects on the credit status of countries worldwide, including Vietnam, with exports, tourism, and weakening global demand all facing challenges.
Fitch also forecast that Vietnam’s economy will be revived in 2021 with an estimated growth of 7.3% thanks to the gradual recovery in domestic and global demand.
According to Director of Department of Debt Management and External Finance under the Ministry of Finance, Truong Hung Long, several factors may have created a positive impact on the final assessment of Fitch including Vietnam’s maintenance of its macroeconomic stability.
This is partly reflected in flexible management policies to ensure flexibility in monetary policy and maintain the level of foreign exchange cushions. In addition, Vietnam has also improved its public finance with lower budget overspending, its Government debt ratio and has also reduced contingent liabilities.
Fitch's maintenance of Vietnam's rating at BB with a Stable outlook also reflects the general situation as the COVID-19 pandemic is continuing to spread on a global scale, affecting all country’s socio-economic health.
Since the beginning of 2020, credit rating agencies have downgraded the sovereign rating outlook of 42 countries around the world.
S&P Global Ratings lowered the outlook of eight countries and the rating of 14 countries. Moody’s downgraded the outlook of two countries and ratings of 12 others.
Meanwhile, Fitch downgraded the outlook of nine countries and rating of 14 countries (including Thailand) and is expected to continue providing updated reviews in the near future.
The highlight of Fitch's assessment is that the agency recognises that Vietnam's foundation factors and growth momentum will continue to be strong and the improved financial and monetary system will help support a strong recovery in medium term.
Vietnamese agencies involved in dialogues with rating agencies should continue to provide sufficient and timely information to Fitch and other credit rating agencies such as Moody's and S&P to arm them with a comprehensive and correct view of the Government's socio-economic policies in the current COVID-19 pandemic context as well as in the future.
