Vietnam must erase balance-of-payments deficit, Moody’s says

Jan 19, 2011. Vietnam needs to eliminate its balance-of-payments deficit and stabilize its foreign reserves at an adequate level before an upgrade of the nation’s credit rating outlook, Moody’s Investors Service said.

Vietnam’s lack of transparency and communication by the government of its financial and economic policies is a risk, Thomas Byrne, senior vice president at Moody’s, said in Singapore today. The ratings company last month cut the long- term foreign-currency rating to B1 from Ba3, with a negative outlook.

“A primary concern is the risk of a balance-of-payments crisis, which we think has become elevated because of the balance-of-payments deficits in the past three years, and the rundown of reserves,” Byrne said. Containing in inflation would help, he said.

Moody’s view on Vietnam contrasts with its outlook for most of Asia, where it has upgraded ratings for countries such as Indonesia and China. Asia Pacific sovereign ratings are mainly on a “stable to upward trajectory” and are not expected to suffer from contagion from Europe’s debt crisis, the company said today.

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