The Ministry of Finance has submitted a scheme to the Prime Minister for
improving Vietnam's sovereign credit rating, with a target for the country to
achieve investment grade by 2020.
Currently, the nation 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 highlighted 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 would be undertaken
to ensure sustainable growth and development, including restructuring of public
investment, state-owned enterprises, credit institutions and the stock market.
The government would also tighten fiscal policy to reduce the state budget
deficit to 4.5 per cent of GDP by 2015 and 4 per cent by 2020.
Monetary policy would be more
closely co-ordinated with market signals to control dollarisation of the market
and a flexible foreign exchange policy would put the priority on curbing
inflation, reducing the trade deficit, ensure the international balance of
payments, and stabilising the economy.
Finally, public debt would be
managed through an improved legal framework and debt management tools.
In March, the ministry selected
Standard Chartered as a sovereign credit ratings advisor to the government.
Last week, at meeting held by Standard Chartered and the State Bank of Vietnam,
the State Bank's deputy director of international co-operation, Do Viet Hung
reconfirmed that the sovereign credit rating was viewed as the national credit
image in the eyes of the international community of investors, with ratings
capable of affecting the country's ability to raise capital necessary for
socio-economic development.
Standard Chartered, with it
significant onshore presence, would 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 would also share
its experience and give recommendations to Vietnamese agencies on 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 used to determine a
country's borrowing cost in international capital markets. Improvement of
sovereign credit ratings can also help a country attract greater foreign
investment.
VNS
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