Local and international experts have disagreed with a move by which international credit rating agency Fitch had downgraded Vietnam’s foreign and local currency sovereign rating to B+ from BB-, saying that it is unpersuasive.
The new ratings after a previous downgrade on Vietnam made one year ago puts Vietnam three places below Indonesia and two under the Philippines. Fitch Ratings said the downgrade was due to the indecisive economic policy, foreign-exchange reserves, and banking system.
Thoi Bao Kinh Te Saigon newspaper has quoted the Asian Development Bank, which noted positive macroeconomic conditions for Vietnam, as saying that it was surprised by such decision of Fitch Ratings.
“We are very much surprised at the announcement by Fitch, as our view on the recent macroeconomic conditions of Vietnam is very positive,” ADB country director Ayumi Konishi said.
Tran Hoang Ngan, a member of the National Advisory Council on Monetary Policy, reiterated that foreign institutions had different views on how to rate a country.
“If Fitch downgrades Vietnam, it would not impact the country much in the future while other prestigious institutions of IMF, WB, and ADB have a positive outlook on Vietnam’s economy,” he said.
Ngan commented that since 2008, monetary policies of all countries around the world including Vietnam had been reactive and inconsistent to deal with the crisis. When the world economy is stable, the policies would be as stable as usual, he added.
“However, this assessment serves as a warning to Vietnam to reconsider its policies and macro economy in order to make improvements in the future,” he added.
Meanwhile, economist Le Dang Doanh said the downgrade would be a disadvantage for Vietnam in the future as the country had been in need of foreign funds. Vietnam’s international bonds will require higher coupons while higher lending rates will be applied to loans in Vietnam, Doanh said.
In addition, foreign capital flowing to Vietnam in the future might fall due to the impact from the downgrade, he added.
Doanh also hinted that rating agencies did not have a good understanding of Vietnam’s economy.
“This suggests that in the future we should invite those credit rating institutions to the country and show them how good we are,” the economist said. He added this could be seen as a wake-up call for the Government to seriously reconsider their inconsistent economic policies. (Saigon Economic Times , VnEconomy)
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