Vietnam Outlook Rated Stable, But Wide Reforms Needed: S&P

HANOI, July 11 (Bernama) -- Global ratings firm Standard and Poor (S&P) has retained its BB-long term and B short term sovereign credit ratings on Vietnam, and said the country's outlook is stable, Xinhua news agency reported.

It also affirmed a BB- issue rating on Vietnam's senior unsecured bonds and a BB+ long term and a B short term Asean regional scale rating on the country.

The transfer convertibility assessment remains graded as BB-, Vietnam's state-run news agency VNA said Thursday.

According to S&P, the ratings on Vietnam reflect its low-income economy, its weak fiscal position, a developing monetary and financial framework and the possibility that its involving policy framework could weaken sovereign risk indicators.

Vietnam's macroeconomic conditions reflect the government's policy choices which emphasise stability and the need to address structural shortcomings in the banking and state-owned sectors in particular, said S&P credit analyst Agost Bernard.

"Stabilisation measures undertaken since 2011 have considerably reduced macroeconomic imbalances, improved confidence in the local currency, and led to somewhat greater perceived policy credibility."

S&P said Vietnam is supported by a moderate and improving external position, with sovereign external borrowings remaining modest and at a low cost and long maturity.

They projected that the gross external debt of the country will remain below 50 percent of the Gross Domestic Product (GDP) during the next three years.

The rating agency expected Vietnam will maintain an appropriately tight economic policy stance that allows reform of banks and other sectors to progress while maintaining macroeconomic stability.

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