Credit rating firm Fitch has upgraded Vietnam's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB-' from 'B+', said the Ministry of Finance on November 3.

Fitch has upgraded Vietnam's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'BB-' from 'B+' (Photo: VNA).

In addition, the issue ratings on Vietnam's senior unsecured foreign and local currency bonds are also upgraded to 'BB-' from 'B+'. The Country Ceiling is upgraded to 'BB-' from 'B+' and the Short-Term Foreign Currency IDR was affirmed at 'B'.

The revision of the Outlook on Vietnam’s IDRs was based on an improvement in macroeconomic stability. Fitch said Vietnam’s economy has been stable and its Gross Domestic Product (GDP) has remained relatively strong at a 3-year average of 5.6 percent against a 'BB' range median of 3.7 percent.

Inflation has moderated to 3.2 percent as of October 2014, down from an average of 6.6 percent in 2013. The country’s savings and investment rates were higher than those of other nations. According to Fitch, Vietnam’s macroeconomic stabilisation has contributed to a sharp turnaround in the current account from a deficit of 3.7 percent in 2010 to a projected surplus of 4.1 percent in 2014.

Meanwhile, foreign direct investment (FDI) inflows, which accounted for 4.5 percent of the nation’s GDP in 2011-2013, have helped to balance payments surpluses and foreign reserve accumulation.

The firm assumed that Vietnam’s macro economy will continue to be maintained stably in the future and this will be a positive factor in the country’s efforts to restructure its banking system and state enterprises, and improve its capacity for paying external debts.