MoF disagrees with Moody’s decision

Earlier, on December 18, Moody’s placed the Ba3 local and foreign currency issuer and senior unsecured ratings of the Government of Viet Nam under review for downgrade. 

The decision to place the ratings under review for downgrade is driven by institutional deficiencies that have come to light. In particular, Moody's has become aware of delayed payments on an obligation by the Government. While the information available so far points to no or minimal losses for creditors, the coordination gaps within the administration that the delayed payments may reflect, point to credit worthiness that may no longer be consistent with a Ba3 rating. During the review period, Moody's will assess the practices and systems the government has or is instituting, to ensure reliable, timely, and smooth payment of all obligations.

Moody's expects to complete the review within three months.

Viet Nam's long-term foreign currency (FC) bond ceiling at Ba1, its long-term FC deposit ceiling at B1, and its local currency bond and deposit ceilings at Baa3 are unchanged. The short-term FC bond and deposit ceilings remain unchanged at Not Prime.

The key driver behind Moody's decision to place Viet Nam's rating under review for downgrade is institutional weaknesses, as revealed by delayed payments on an obligation by the government.

However, the MoF recognized that the decision was inconsistent with the drastic instructions of the Government, a series of measures of the Government, MoF, and relevant agencies to improve payments and ensure non-damage for lenders. 

The MoF affirmed that the Vietnamese Government always seriously complies with debt payment obligations in accordance with its commitments with development partners and international institutions. 

Earlier, the PM asked the MoF, relevant ministries, sectors, and agencies to allocate capital and fulfill debt payment obligations on schedule. 

In the coming time, the Vietnamese Government will pursue the target to ensure macro-economic stability; strengthen the economy; accelerate institutional reform to safeguard debt payments; maintain public debt stability and financial security. 

The MoF and relevant agencies are willing to provide transparent information and convincing evidence on the Government’s debt payments so that Moody’s, other credit organizations and international ones would have adequate and positive information and foundations on Viet Nam’s credit records./.  

By Kim Loan