Vietnam mustn’t sacrifice stability for high-speed growth if it’s to become an investment-grade economy, warned Fitch Ratings.
The rating company wants evidence that macroeconomic stability is more entrenched before considering further upgrades for Vietnam, said Stephen Schwartz, head of sovereign ratings in Asia Pacific for Fitch, which last month lifted the nation’s credit score to BB. Fitch is also monitoring efforts to address the economy’s structural weaknesses, including the reform of state-owned enterprises and management of non-performing loans.
“The challenge for policies will be to sustain high economic growth without sacrificing the gains made in macro stability, which were the basis for our recent rating upgrade,” Schwartz said in an interview in Hanoi. “The government is aware of and making progress in the key areas of structural weaknesses and challenges.”
Vietnam won a sovereign rating upgrade from Fitch in May on rising foreign-exchange reserves and strong growth, putting the nation’s long-term, foreign currency-denominated debt two notches away from investment-grade.
Vietnam has one of the world’s fastest-growing economies after annual expansion accelerated to 7.4 percent in the first quarter, the most since at least 2005. The government wants to maintain fast growth while keeping inflation under control, recently taking measures including subsidising rising fuel costs and telling ministries not to increase electricity prices.
“In the environment of the global monetary tightening, the central banks in Vietnam and around the region need to stay vigilant” said Schwartz.
https://www.bloomberg.com/news/articles/2018-06-13/vietnam-must-tread-carefully-to-win-investment-grade-fitch-says?utm_source=google&utm_medium=bd&cmpId=google
