Home / Economy / Banking & Finance
Vietnam 2020 government debt to stay in line with current sovereign rating: Fitch
Nguyen Tung 17:27, 2020/09/08
Fitch Rating is still maintaining its growth forecast for Vietnam at 2.8% in 2020 and 7.5% in 2021, despite the Covid-19 resurgence in late July.

Vietnam’s government debt-to-GDP ratio is set to rise to around 42% in 2020, from 37% in 2019, but this is still below the 59% median for its current “BB” rated sovereigns, according to Fitch Ratings.

 Fitch Rating forecasts Vietnam's GDP growth in 2020 at 2.8% year-on-year. 

A higher government debt was mainly due to the introduction of a fiscal stimulus package of around VND279 trillion (US$12.03 billion or 3.4% of GDP) to help offset the effects of the pandemic. This includes tax deferrals, cuts and exemptions, as well as cash transfers to affected workers and households.

Meanwhile, Vietnam continues to stand out this year among Asia’s frontier and emerging markets in terms of economic resilience during the coronavirus pandemic, stated the rating agency.

Official data show the economy expanded 0.4% year-on-year in the second quarter, in line with Fitch’s 2020 2.8% growth estimate.

“Vietnam is one of only four sovereigns in Asia Pacific that we expect to post growth in 2020,” Fitch said.


Fitch affirmed Vietnam’s rating at ‘BB’ in April, revising the outlook from Positive to Stable, reflecting strong medium-term growth prospects, macro-stability, lower government debt and stronger externals relative to peers.

Vietnam’s tourism sector has been hit hard by the pandemic. Restrictions on inbound tourism are still in place and tourist arrivals fell about 65% year-on-year on average from January-July. Tourism is about 10% of GDP with a higher contribution if indirect spillover effects are considered.

Meanwhile, exports have been affected by the decline in demand from Vietnam's key export markets, including the US and China, although demand from China has begun to recover.

Vietnam had been successful in controlling community transmission of the virus during the early stages of the crisis, and no official deaths were reported until end-June 2020. However, a local outbreak in Danang and Hoi An since end-July has led to a reintroduction of social distancing measures in these areas.

Nevertheless, Fitch is still maintaining its growth forecast of 2.8% in 2020 and 7.5% in 2021, although these forecasts remain subject to a high degree of uncertainty.

For the Asia Pacific region, Fitch projected regional growth will rebound in 2021 from the troughs in 2020. In the meantime, weak domestic spending will only be partially offset by improving exports. Countries highly reliant on tourism receipts, such as the Maldives and Thailand, will face a delay in their recovery, while those dependent on remittances, such as Bangladesh and the Philippines, may also take time to recover.

TAG: Vietnam Fitch Rating Covid-19 resurgence Danang hoi an coronavirus nCoV pandemic GDP growth government debt
Other news
09:26, 2021/26/27
C.bank expands credit quota for banks to meet growing credit demands
Many banks have reached their respective credit limits in the first nine months of 2021.
19:35, 2021/35/26
Vietnam bond market expands to over US$83 billion: ADB
On an annual basis, the bond market expanded 23.5% year-on-year in the third quarter, slowing from 27.5% year-on-year growth in the second one.
13:09, 2021/09/24
Banks forego over US$684 million for customers
Banks’ profits are expected to decline by a total of VND20.6 trillion (US$908.3 million) until late 2021 due to business support schemes during the pandemic.
16:06, 2021/06/23
Central Bank injects $2.63 billion into forex reserves
This resulted in trillions of dong being pumped into the economy and helped reduce the inter-banking lending rates.
09:54, 2021/54/20
Vietnam household spending to return to conventional patterns in 2022: Fitch Solutions
The estimated consumer spending growth of 5.7% in 2022 stays in line with the agency’s forecast of economic growth by a real rate of 8% year on year.
16:25, 2021/25/19
Vietnamese Gov’t to push for digital society for public’s benefits
Only when the people are aware of the benefits of non-cash payments then the Government’s efforts could be considered successful.