Illustrative Photo: VNA

Five solutions to improve national credit rating

According to the National Credit Rating Improvement Project by 2030, Vietnam sets to raise its credit rating to Baa3 or better on the Moody's scale or BBB or better on the Standard & Poor’s and Fitch scale by 2030.

For fiscal targets, Vietnam strives to control the state budget aiming to reduce overspending to around 3% of the GDP and ensure that public and government debts will not exceed 60% and 50% of GDP, respectively.

According to Mr. Truong Hung Long, Director of the Department of Debt Management and External Finance (Ministry of Finance), the overall goal of the Party and State in the 10-year socio-economic development strategy for the 2021-2030 period is to "Enhance the position and prestige of Vietnam in the international arena", therefore, the Prime Minister's approval for National Credit Rating Improvement Project by 2030 is of great significance.

The proposed goals and orientations to improve the national credit rating are expected to create positive momentum and create prospects for the improvement of Vietnam's national credit rating in line with the requirements of the Party, State and Government in the medium and long term.

In the near future, considering that Vietnam has become a middle-income country and will gradually depend more on foreign commercial loans, the national credit rating improvement will help the Government, businesses, financial institutions and credit institutions achieve more cost-effectiveness in capital mobilization or bond issuance to international capital markets.

To achieve the above goals, five key solutions have been developed. Accordingly, Vietnam will implement the tasks and solutions set out in the socio-economic development strategy for the 2021-2030 period and the socio-economic development plans in each five-year period.

In addition, Vietnam will improve the quality of institutions, governance and enhance the transparency of data in line with international practices. Moreover, the country will actively participate and closely monitor the Worldwide Governance Indicators (WGI) and other global rankings on governance, business environment and human development.

Building a strong public financial system

In addition, an important solution directly related to the Ministry of Finance is to build a strong public financial system, expand the sustainable revenue base to improve debt ratios and promote fiscal consolidation.

Accordingly, Vietnam will continue to strengthen the healthy fiscal system, and focus on improving the score on state budget revenue through perfecting the collection policy system in association with restructuring state budget revenue towards covering all revenue sources and expanding the revenue base, especially new revenue sources in line with reality, integration commitments and international practices.

Along with that, Vietnam will improve afiscal indicators, reduce state budget overspending, the public debt and government debt; enhance the transparency of fiscal policy; promote the management of budgetary finance in the medium term, harmony of the medium-term public investment plan and the national financial plan, and the five-year public debt borrowing and repayment plan; implement the three-year state budget-financial plan, the three-year public debt management program in accordance with laws and international practices; strengthen the application of international practices in risk management of the Government debt portfolio.

In order to contribute to improving the national credit rating and raising awareness of the importance of the national credit rating, the strengthening of cooperation with credit rating agencies and other international organizations will also be a focus in the near future.

Accordingly, Vietnam will learn from international experience, actively consult domestic and international experts, and constantly raise awareness of the importance of the national credit rating, thereby improving the quality of the information provided, methods of working with credit rating agencies to reflect positive information on macroeconomics, fiscal, monetary, and public debt management.

Furthermore, Vietnam will improve the initiative and coordination among ministries, agencies and organizations.