The ministry affirmed the government of Vietnam has never been tardy in meeting its debt obligations.
The Vietnamese Ministry of Finance has expressed its disapproval of Moody’s Investors Service’s decision to put Vietnam’s sovereign rating under review for downgrade, and affirmed that the Vietnamese government has always serviced its obligations in a timely manner.
Moody’s on October 9 placed the Ba3 local and foreign currency issuer and senior unsecured ratings of the government of Vietnam under review for downgrade due to “institutional weaknesses” after the agency become aware of delayed payments on an obligation by the government.
The weaknesses seem to reflect deficient coordination and planning among various arms of the government to meet some of the government’s obligations in a smooth and timely manner, the agency explained, without specifying which obligation triggered the warning.
The ministry asserted that the obligation is guaranteed by the government, meaning that it is a provisional obligation, not a direct one.
“The government of Vietnam has fulfilled the responsibility of the guarantor in payment of the obligation, even when it is yet to receive the order of the Creditor,” the ministry said in a statement on its website. “The government has never been tardy in meeting its obligations.”
The ministry said Moody’s decision to place the country’s rating under review for downgrade based on just a single incident is improper, without taking into account the government’s efforts to ensure macroeconomic stability.
That Moody’s issued a press release while being unclear of processes and mechanisms under which government-guaranteed debts are serviced could lead to misunderstanding by international investors about Vietnam’s ability to pay back debts and may taint its credibility and prestige in the international arena, the ministry noted.
The ministry affirmed it stands ready to provide necessary and accurate information for Moody’s and other rating agencies to clarify the issue.
In its announcement, Moody’s said that Vietnam’s large foreign exchange reserves and modest government financing requirements denote ample capacity to meet debt obligations and Vietnam’s credit profile will remain underpinned by strong growth potential.
At a press meeting on Thursday morning, Jacques Morisser, lead economist of the World Bank in Vietnam, commented that Vietnam had sufficient financial resources to meet its debt obligations, given its ample forex reserves and moderate public spending over the past few years. The key issue was the deficient coordination of government agencies.
