Moodys - Vietnam - Issuer in Depth

SOVEREIGN AND SUPRANATIONAL
ISSUER IN-DEPTH
31 May 2020
Government of Vietnam – Ba3 negative
Annual credit analysis
RATINGS OVERVIEW AND OUTLOOK

Vietnam The credit profile of Vietnam (Ba3 negative) is supported by its robust long-term growth
Foreign Local prospects, trade dynamism and attractiveness as a foreign investment destination. Vietnam
Currency Currency
will continue to benefit from trade and investment diversion as global protectionist pressures
Gov. Bond Rating Ba3/NEG Ba3/NEG
Country Ceiling Ba1 Baa3
persist, reflecting its strengthening competitiveness and a deepening transition to higher
Bank Deposit Ceiling B1 Baa3 value-added industrial activity. In recent years, these trends have contributed to current
account surpluses and a healthy buildup in foreign-exchange reserves that limit Vietnam's
TABLE OF CONTENTS vulnerability to external financing stress.
OVERVIEW AND OUTLOOK 1
SPECIAL TOPIC 2 The coronavirus pandemic presents near-term challenges to Vietnam's strengths. In
CREDIT PROFILE 3 particular, deteriorating external demand is weighing on exports and tourism, while global
Economic strength score: a3 3 and domestic containment measures disrupt supply chains, curb consumption and weaken
Institutions and governance strength investment activity. We also expect wider deficits and a mild increase in public debt as the
score: b2 8
Fiscal strength score: baa3 11
government pursues fiscal support measures to mitigate the impact on households and
Susceptibility to event risk score: ba 14 businesses.
ESG considerations 18
Notwithstanding strong fundamentals that we expect to remain intact as the country
Scorecard-indicated outcome 19
recovers from the outbreak, our negative outlook on Vietnam incorporates recent delayed
Comparatives 20
DATA, CHARTS AND REFERENCES 21
payments on government-guaranteed obligations. While these delayed payments revealed
administrative deficiencies that inform our assessment of institutions and governance
strength, debt payment management practices have been strengthened with greater scrutiny
Contacts of the range of debt payments coming due.
Christian de Guzman +65.6398.8327
Senior Vice President
We would likely downgrade Vietnam’s rating if delays in meeting its direct or indirect debt
christian.deguzman@moodys.com payment obligations recurred, pointing to more persistent administrative deficiencies than
Claire Long +65 6398 8323
we currently assume. Downward pressure on the rating would also result from a reemergence
Associate Analyst of financial instability which led to higher inflation and a rise in debt-servicing costs, and
claire.long@moodys.com signs of reversal of the current stabilization in the debt and deficit trajectory.
Gene Fang +65.6398.8311
Associate Managing Director We would likely change the outlook on Vietnam’s Ba3 rating to stable on more tangible
gene.fang@moodys.com evidence that the government will meet its direct and indirect payment obligations in a
Marie Diron +65.6398.8310 smooth and timely manner for the foreseeable future. Over time, prospects of a continued
MD-Sovereign Risk decline in the debt burden amid strong growth and competitiveness would put upward
marie.diron@moodys.com pressure on the rating.
This credit analysis elaborates on Vietnam’s credit profile in terms of economic strength,
institutions and governance strength, fiscal strength and susceptibility to event risk, which
are the four main analytic factors in our Sovereign Ratings Methodology.
This document has been prepared for the use of Rodolfo Larotta and is protected by law. It may not be copied, transferred or disseminated unless
authorized under a contract with Moody's or otherwise authorized in writing by Moody's.
MOODY'S INVESTORS SERVICE SOVEREIGN AND SUPRANATIONAL
SPECIAL TOPIC
Scorecard impact of revised national accounts
In December 2019, Vietnam's General Statistics Office (GSO) released a revised national accounts series in cooperation with the IMF.
Reflecting a closer alignment of official statistical methodologies with international standards, the revision revealed that the Vietnamese
economy was larger than previously thought.
Under the revised methodology, Vietnam’s nominal GDP in 2018 was $302.8 billion, nearly 25% larger than the previous estimate of $240.8
billion. This led to a shift in the sub-factor score for scale of the economy to “a2” from “a3” (see Exhibit 1) and a similar move in the overall
factor score for economic strength to “a3” from “baa1”. The size of the Vietnamese economy is now comparable with the $289 billion median
for sovereigns with economic strength assessments of “a3”, and much larger than the “baa1” median of $106 billion.
Exhibit 1 Exhibit 2
Vietnam's nominal GDP is 25% larger than previously Lower debt-to-GDP ratios provide greater room for
estimated, shifting the score for scale of the economy to “a2” countercyclical spending under the statutory debt ceiling
from “a3” (Public debt, share of GDP)
(Nominal GDP, $ billion)
Old series New series Old series New series
350 a1 Statutory debt ceiling
300 70%
a2 65%
250 60%
a3
200 50%
baa1
150 40%
100
30%
50
20%
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 10%
Vietnam's GSO released data for the period between 2010 and 2017; historical data 0%
before 2010 and after 2017 have been calculated using growth rates from previously 2010 2011 2012 2013 2014 2015 2016 2017 2018
published figures.
Sources: National authorities, Haver Analytics and Moody's Investors Service Statutory debt ceiling is 65% of GDP and covers public debt, including direct
government debt and government-guaranteed debt.
Sources: National authorities, Haver Analytics and Moody's Investors Service
The revision of the national accounts has also impacted credit metrics that use nominal GDP as a denominator. For example, fiscal and
current account balances have narrowed, debt ratios have fallen, and the financial system appears smaller. Unlike our assessment of economic
strength, these revised metrics have not led to changes in other factor scores, such as fiscal strength or banking sector risk. However, lower
public indebtedness as a share of GDP provides space for the government to implement countercyclical fiscal policies; previously, public debt
as measured against the previous national accounts series had approached the statutory debt ceiling (see Exhibit 2), although there has been
progress on mild debt consolidation in recent years.
2 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis
CREDIT PROFILE
Our determination of a sovereign’s government bond rating is based on the consideration of four rating factors: economic strength,
institutions and governance strength, fiscal strength and susceptibility to event risk. When a direct and imminent threat becomes a
constraint, that can only lower the scorecard-indicated outcome. For more information please see our Sovereign Ratings Methodology.
Economic strength score: a3
Factor 1: Overall score
baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
Scale
a1
a2
a3
b1
b2
b3
ca
+ Final -
Factor 1: Sub-scores
Vietnam a3 Score for Vietnam Median of countries with Ba3 rating
SCALE OF THE
GROWTH DYNAMICS ECONOMY NATIONAL INCOME
weight 25% weight 10% weight 30% weight 35%

Average real GDP (% change) Volatility in real GDP growth (ppts) Nominal GDP ($ bn) GDP per capita (PPP, Intl$)
aaa
aa
baa
ba
caa
ca
Economic strength evaluates the economic structure, primarily reflected in economic growth, the scale of the economy and wealth, as well as in
structural factors that point to a country’s long-term economic robustness and shock-absorption capacity. Adjustments to the economic strength
factor score most often reflect our judgement regarding the economy's flexibility, diversity, productivity and labour supply challenges.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score will
appear in the table above.
Vietnam's economic strength score is “a3,” balancing the country's robust growth and large size against very low GDP per capita
relative to its peers. In addition, rising competitiveness and a deepening transition to higher value-added industrial activity is supported
by the diversion of trade and investment to Vietnam from other parts of the region amid trade tensions between the US (Aaa stable)
and China (A1 stable), partly offsetting cyclical pressures on global trade. Our view of Vietnam’s economic strength also incorporates
our classification of the country as one of the sovereigns most vulnerable to climate change.
Other sovereigns with a “a3” score for economic strength include the Philippines (Baa2 stable), Mexico (Baa1 negative) and Egypt (B2
stable).
Exhibit 4
Peer comparison table factor 1: Economic strength

Vietnam a3 Median Philippines Mexico Egypt Italy Indonesia Bahrain
Ba3/NEG Baa2/STA Baa1/NEG B2/STA Baa3/STA Baa2/STA B2/STA
Final score a3 a3 baa1 a3 a3 a2 baa1
Initial score a3 baa1 baa1 a3 a3 a1 a3
Nominal GDP ($ billion) 302.8 289.3 346.8 1,220.7 249.6 2,084.8 1,042.2 37.7
GDP per capita (PPP, Intl$) 7,513.1 37,339.7 8,942.7 20,616.3 13,357.7 39,675.5 13,234.1 50,048.5
Average real GDP (% change) 6.4 3.8 5.6 1.2 4.4 0.4 4.5 2.4
Volatility in real GDP growth (ppts) 0.6 2.2 1.9 2.8 1.3 2.3 0.6 1.2
Sources: National authorities, IMF and Moody's Investors Service
Strong growth interrupted by coronavirus shock
With a nominal GDP of around $327 billion in 2019, Vietnam is the third-largest economy among Ba-rated sovereigns, smaller than
only Brazil (Ba2 stable) and South Africa (Ba1 negative). While the country’s purchasing price parity (PPP)-adjusted per capita GDP
doubled to over $7,500 in 2018 from $3,384 in 2006, it remains in the bottom 30% of rated sovereigns.
In 2019, Vietnam maintained real GDP growth at 7.0% – close to the average annual increase of 6.9% recorded between 2015 and
2018 – even as the wider Asia Pacific region slowed significantly because of weaker growth from China and the intensification of global
trade tensions. In addition, Vietnam's rate of expansion continued to outpace the Ba peer median, as well as all rated peers in the
Association of Southeast Asian Nations (ASEAN)1 (see Exhibit 5).
Vietnam appeared to benefit from trade and investment diversion spurred by tensions between the US and China, imparting strength
to an export-oriented manufacturing sector that has recorded double-digit growth in each of the past five years. Robust export
performance spilled over to healthy domestic demand, as indicated by the rapid growth of the construction and services sectors,
particularly in wholesale and retail trade (see Exhibit 6).
Exhibit 5 Exhibit 6
Real GDP growth has outperformed similarly rated peers and Manufacturing has been the main driver of growth in recent years
regional peers (Year-on-year growth)
(Year-on-year growth)
Vietnam Ba median ASEAN rated peers Agriculture Mining Manufacturing Construction Services Others
8.0 20%
7.0
6.0 15%
5.0
10%
4.0
3.0
5%
2.0
1.0 0%
0.0
-1.0 -5%
-2.0
-10%
2014 2015 2016 2017 2018 2019
Source: Moody's Investors Service Sources: Haver Analytics and Moody's Investors Service
More recently, the coronavirus outbreak has presented unprecedented challenges to the Vietnamese economy, weighing on the near-
term outlook for growth through a number of channels.
Vietnam was initially impacted by the outbreak via disruptions to regionally integrated supply chains, especially those in apparel and
electronics manufacturing, as China implemented stringent containment measures through the first three months of 2020. Vietnamese
manufacturers faced difficulties sourcing intermediate inputs from China given the suspension of production in the latter, while
heightened control measures led to congestion and other logistical challenges for cross-border trade.
Imports from China – which accounted for almost 30% of all imports in 2019 – declined 0.5% year-on-year in the first quarter of 2020,
led by falls in steel, textiles and other intermediate goods. Consequently, manufacturing growth decelerated sharply to 7.1% year-on-
year, following 11 consecutive quarters of double-digit growth.
Although bilateral trade flows have started to recover as the Chinese economy normalizes, containment measures – including
lockdowns – elsewhere in the region pose further risks to the downstream production or assembly of finished goods, such as mobile
phones, in Vietnam.
The broadening of the outbreak, which has severely curtailed global economic activity, will weigh heavily on Vietnam's merchandise
exports, which amounted to about 80% of GDP in 2019 and still recorded a healthy 7.6% year-on-year expansion in the first quarter
of 2020. In addition, the uncertain outlook is likely to delay investment decisions, potentially disrupting inward flows of foreign direct
investment (FDI) and associated activities, such as job creation and construction.
Restrictions on international travel have also led to a collapse in Vietnam's visitor arrivals, threatening the tourism and transportation
industries, which together accounted for nearly 6% of GDP in 2018, according to the World Travel and Tourism Council. In February
2020, as Vietnam stopped issuing visas for Chinese tourists and partially closed its shared borders with its neighbor to prevent the
spread of the virus, visitor arrivals from China – which accounted for 32.2% of all arrivals in 2019 – plunged by 62.4% year-on-year.
This was followed by even steeper falls of over 90% in each of the next two months. By April, virtually all international visitor arrivals
evaporated, falling 98.2% as air travel globally was curtailed.
The heavy toll on the externally oriented parts of the economy will have negative spillovers to domestic demand, which will be further
exacerbated by the government's imposition of enhanced social distancing measures since the beginning of April 2020. Initially
implemented nationwide for a period of two weeks, these measures called upon residents to stay home except for essential needs,
banned public gatherings of more than two people, suspended public transportation and restricted travel between provinces. This
followed on from the suspension of schools since the Lunar New Year holiday in January. Businesses providing essential services and
factories that had put in place appropriate safeguards continue to operate.
Assuming that a global recovery commences in the second half of 2020, we project the Vietnamese economy to expand 2.5% in 2020,
the weakest outturn since 1999. Given the tremendous uncertainty related to containing the viral outbreak and the extent and pace
of the eventual recovery, especially for Vietnam's largest trading partners such as China and the US, the risks to our forecasts remain
firmly to the downside.
Trade tensions accelerated trend of diversion and supply chain reconfiguration
Beyond the near-term impact of the coronavirus outbreak, we expect Vietnam's real GDP growth to return toward its potential rate
of around 7%, which has been supported in recent years by a growing working-age population and gains in competitiveness. These
strengths have facilitated strong FDI inflows, which have accelerated on the back of global trade tensions and Vietnam's concurrent
efforts to expand its trade network.
Over the past decade, Vietnam has consistently attracted more net FDI as a share of GDP than its developing ASEAN peers, with the
exception of Cambodia (B2 stable). In 2019, total FDI inflows (which include newly registered, adjusted capital, capital contributed
and shares purchased by foreign investors) grew by 7.2% to $38.2 billion (around 15% of GDP), with FDI into the manufacturing sector
accounting for 65% of the total (see Exhibit 7).
Exhibit 7 Exhibit 8
FDI inflows remained strong with a focus on manufacturing FDI registered capital from China and Hong Kong rose sharply in
(FDI by industry, $ billion) 2019
(Registered capital of licensed FDI projects by counterparty, $ billion)
Manufacturing Real estate Japan Korea Singapore Hong Kong China
Wholesale and retail Utility supply 9.0
Others Total FDI
8.0
40 FDI disbursement
35 7.0
30 6.0
25 5.0
20 4.0
15 3.0
10 2.0
5 1.0
0 0.0
2012 2013 2014 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Note: FDI inflows include the total newly registered, adjusted capital, capital contributed Sources: General Statistics Office of Vietnam, Haver Analytics and Moody's Investors Service
and shares purchased by foreign investors.
Sources: Ministry of Planning and Investment, Haver Analytics and Moody's Investors Service
FDI has been distributed among a wide spectrum of sectors, such as electronics — including mobile phones and semiconductors
— consumer durables, and labor-intensive manufacturing such as textiles, garments, and footwear. Consequently, the Vietnamese
economy has become increasingly diversified as it gains greater competency in higher value-added manufacturing while retaining its
ability to produce lower value-added goods and primary commodities, such as rice and coffee.
As mentioned above, Vietnam has been an early beneficiary of trade diversion and supply chain reconfiguration due to elevated US-
China tensions since 2018. The country's high degree of export similarity with China and ample supply of relatively low-cost labor has
positioned it well to attract manufacturers seeking to circumvent US tariffs on Chinese-made goods. As such, 2019 saw a substantial
increase in registered capital associated with FDI projects from China and Hong Kong (Aa3 stable) in 2019, pointing to an acceleration
in industrial relocation away from the mainland (see Exhibit 8). At the same time, traditional investors, such as Korea (Aa2 stable),
Japan (A1 stable) and Singapore (Aaa stable), continue to increase their exposure to Vietnam.
As a result of trade and investment diversion, growth in Vietnam's merchandise exports to the US market more than doubled in 2019,
in contrast to a marked weakening to other destinations (see Exhibit 9). Total merchandise exports in Vietnam grew by 8.5% year-on-
year in 2019, as strong shipments to the US offset negative spillovers from the ongoing slowdown in China's economy. Consequently,
Vietnam's export performance has not been as synchronized with other countries in Asia Pacific despite prominent supply chain
linkages, especially in electronics (see Exhibit 10).
Exhibit 9 Exhibit 10
Shipments to the US market accelerated in 2019, highlighting trade Vietnam's exports have been less synchronized with other Asia
diversion from China Pacific countries over the past year
(Goods exports by destination, year-on-year growth) (Merchandise exports growth, 12-month rolling basis, year-on-year growth)
2018 2019 Indonesia Korea Malaysia

Taiwan Thailand Vietnam
35%
30%
30% 25%
20%
25% 15%
10%
20%
5%
15% 0%
-5%
10%
-10%
5% -15%
-20%
0% 2015 2016 2017 2018 2019 2020
Sources: National authorities, Haver Analytics and Moody's Investors Service

-5%
US China ASEAN EU
Sources: Haver Analytics and Moody's Investors Service
Growth potential supported by strengthening competitiveness and a large working population
The country's robust growth performance and its related ability to attract foreign investment reflects its increasing competitiveness. In
turn, this has reinforced the diversification of the economy, rendering it more resilient to shocks.
Vietnam's ranking in the World Economic Forum (WEF) Global Competitiveness Report has risen to 67th place out of 141 countries in
2019 from 75th in 2009-10. It is now nearly on par with Colombia (Baa2 stable, 57th) and the Philippines (64th), but below Thailand
(Baa1 stable, 40th). Vietnam's economy is also more complex than other Ba3-rated sovereigns, particularly in the context of its lower
per-capita income levels (see Exhibit 11).
Exhibit 11
Vietnam is more complex than most rated peers at similar income levels, boosting competitiveness
(X-axis - WEF Economic Complexity Index (ECI) score, 2019; Y-axis - GDP per capita, 2018)
50000
Oman
45000
40000 Cyprus
35000
Trinidad & Tobago
30000
25000 Croatia
Dominican Republic
20000 Serbia
Paraguay Azerbaijan
15000 Brazil
Georgia
10000 Namibia Armenia
Cote d Ivoire Bolivia Guatemala Vietnam
5000 Bangladesh
Senegal Morocco
0
46 48 50 52 54 56 58 60 62 64 66 68
Note: Higher ECI score = more complex

Sources: World Economic Forum and Moody's Investors Service
Meanwhile, demographics will continue to support Vietnam's growth over the next two decades. About 70% of the population is
currently within the working-age bracket (15-64), from a little over 50% in the 1980s. According to the United Nations, the working-
age population will continue to rise through 2037, while the dependency ratio2 will rise gradually to around 52% by 2040 from roughly
45% currently. By contrast, China's working-age population had already peaked in 2015 and its dependency ratio is above 40%, which
is contributing significantly to the ongoing decline in potential growth.
Climate change risk weighs on economic strength
Our view of Vietnam’s economic strength also incorporates our classification of the country as one of the sovereigns most vulnerable
to climate change. The assessment is based on the magnitude and frequency of economically disruptive climate events, combined with
limited fiscal space to mitigate the impact of such events when they occur, as identified in our report on environmental risks and their
impact on sovereigns.
In addition, Vietnam is susceptible to rising sea levels over the long-term, which would inundate large portions of its land area and
threaten coastal populations and economic activity in the absence of effective adaptation measures.
Institutions and governance strength score: b2

baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
Scale
a1
a2
a3
b1
b2
b3
ca
+ Final -
Vietnam b2 Score for Vietnam Median of countries with Ba3 rating
QUALITY OF INSTITUTIONS POLICY EFFECTIVENESS

Quality of Legislative and Executive
Institutions Strength of Civil Society and the Judiciary Fiscal Policy Effectiveness Monetary Policy Effectiveness
aaa
aa
baa
ba
caa
ca
Institutions and governance strength evaluates whether the country’s institutional features are conducive to supporting a country’s ability and
willingness to repay its debt. A related aspect is the government's capacity to conduct sound economic policies that foster economic growth and
prosperity. Institutions and governance strength is most often adjusted for the track record of default, which can only lower the final score.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score
will appear in the table above.
Our “b2” assessment of Vietnam’s institutions and governance strength balances administrative deficiencies revealed in recent
delayed debt payments against a lengthening track record of maintaining macroeconomic stability amid robust growth. Through
investments in infrastructure and a favorable investment climate, the government has enabled the rapid buildup of a large and
diversified manufacturing sector, further demonstrating policy effectiveness. The government has also facilitated the strengthening in
the financial health of the banking system and a mild consolidation of fiscal deficits, although the coronavirus shock will temporarily
disrupt these trends.
Other sovereigns with a “b2” assessment include Guatemala (Ba1 stable), Azerbaijan (Ba2 stable) and Bangladesh (Ba3 stable).
Exhibit 12
Peer comparison table factor 2: Institutions and governance strength
Vietnam b2 Median Azerbaijan Bangladesh Guatemala Cambodia Laos Bolivia

Ba3/NEG Ba2/STA Ba3/STA Ba1/STA B2/STA B3/POS B1/NEG
Final score b2 b2 b2 b2 b3 b3 b1
Initial score b2 b2 b2 b2 b3 b3 b1
Quality of legislative & executive institutions caa b b b b caa caa ba
Strength of civil society & judiciary b b caa caa caa caa ca b
Fiscal policy effectiveness b ba ba b ba b b b
Monetary & macro policy effectiveness ba b b ba b b ba b
Fiscal balance/GDP (3-year average) -3.4 -2.9 3.3 -4.9 -2.7 -3.4 -4.1 -6.1
Average inflation (% change) 3.1 5.3 4.8 5.8 3.4 2.5 3.3 3.1
Volatility of inflation (ppts) 5.1 4.3 4.5 1.2 1.2 1.6 2.6 2.3
Source: National authorities, IMF, Moody's Investors Service
Recent delay of debt payments weigh on the quality of institutions
Delayed payments on a guaranteed debt obligation led us to place Vietnam's Ba3 rating on review for downgrade in October 2019.
While the information available pointed to no or minimal loss for creditors, the delayed payments reflected coordination gaps within
the administration, which informs our assessment of the quality of legislative and executive institutions at “caa.”
We confirmed the rating at Ba3 in December 2019, having determined that debt payment management practices had been
strengthened with greater scrutiny of the range of debt payments coming due. The government intends to monitor more closely
a comprehensive list of direct and indirect debt obligations, and it has the financial capacity to meet these obligations. With a
coordinated focus on ensuring that payments are planned for and processed promptly, the risk of renewed delays has diminished.
Strength of civil society and judiciary at “b” reflects the confluence of disperse readings for the Worldwide Governance Indicators
(WGI). Relatively strong rule of law is balanced against weaker assessments for control of corruption and, especially, voice and
accountability (see Exhibit 13).
The tight control of the state apparatus by the Communist Party of Vietnam is reflected in the World Economic Forum's 2019 Global
Competitiveness Report,3 where Vietnam ranks 135th out of 141 countries for “Checks and balances,” with a particularly weak
assessment for freedom of the press. Freedom House has a similar view on the freedom and independence of the media in Vietnam,
while also noting that the “judiciary is subservient to the [Communist Party of Vietnam], which controls the courts at all levels.”4
Vietnam’s WGI scores are consistent with the “ba” median for Rule of law, government effectiveness and regulatory quality have
governance and institutional strength been strengthening
(Percentile rank among rated countries, 2018) (Percentile rank among rated countries)
Vietnam Bangladesh Government Effectiveness Rule of Law

Median - b F2 Median - ba F2 Control of Corruption Voice & Accountability
Government Regulatory Quality
60
Effectiveness
60
50
40
40
Regulatory Quality 20 Rule of Law
0 30
20
Voice and Control of 10

Accountability Corruption
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Moody's Investors Service Source: Moody's Investors Service
Macroeconomic stability amid strong growth supports policy effectiveness
Relative to our assessment of the quality of institutions, our stronger score for monetary and macroeconomic policy effectiveness
at “ba” reflects a lengthening track record of maintaining macroeconomic stability, as well as the progress made in recent years on
increasing the soundness of the banking system.
The government’s success in engendering a conducive environment for economic growth, powered by foreign investment, is shown
in Vietnam’s WGI rankings on government effectiveness and regulatory quality, which have trended higher over the past decade (see
Exhibit 14). Progress on infrastructure development and creating a competitive investment climate has enabled a large and diversified
manufacturing sector to build rapidly. This has led to robust export growth that fortified its external position. In addition, inflation has
been lower and less volatile than in the past when boom-bust cycles were a common feature.
For example, between 2013-19, the averages for real GDP growth, inflation and the current account surplus were 6.7%, 3.4% and 1.8%
of GDP, respectively (see Exhibit 15). In the preceding seven-year period between 2006-12, average real GDP growth was slightly lower
at 6.2%, while inflation averaged a much higher 11.8% and the average current account balance was a deficit of 2.7% of GDP.
Exhibit 15
Lengthening track record of macroeconomic stability mirrored in lower, less volatile inflation
(CPI inflation, % year-on-year)
30%
25%
20%
15%
10%
5%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sources: General Statistics Office of Vietnam, Haver Analytics and Moody's Investors Service
Despite these stronger outcomes, we regard the central bank's monetary policy framework to be somewhat underdeveloped
compared with those in other large emerging markets in the region, where inflation-targeting regimes and clearer articulation and
implementation of policy have underpinned greater credibility. Vietnam's continued emphasis on credit growth targets has also kept
systemwide leverage at elevated levels more comparable to advanced economies.
Nevertheless, the acute systemic risks in the banking system, which contributed to the downgrade of Vietnam's sovereign rating to B2
from B1 in 2012, have abated, especially with regards to asset quality and liquidity. While capitalization remains weak compared with
other systems in the region, contingent risks to the government have ebbed.
Although the coronavirus shock will lead to the weakest growth for Vietnam in more than two decades, we expect overall
macroeconomic stability to remain intact. The current account will remain in surplus, while inflation will trend downward from the
seven-year high of 6.4% year-on-year in January 2020, albeit in part due to the significant drop in oil prices since then. The disruption
to economic activity will, however, challenge the trend stabilization of the banking system.
Our assessment of fiscal policy effectiveness at “b” balances recent strengthening in the government's fiscal position against
shortcomings related to the transparency of its fiscal accounts. After coming close to breaching its debt ceilings,5 fiscal deficits have
narrowed and government debt has stabilized since reaching a peak in 2016.
The authorities have not fully adopted more robust standards for data collation and reporting, although recent improvements
include the removal of inter-temporal transfers that had previously constrained comparability versus other countries. Reporting
of extrabudgetary accounts and explicit contingent liabilities remains opaque. However, the government is engaged in technical
assistance programs with development partners to work toward the adoption of the Government Financial Statistics Manual 2014 and,
more broadly, a transition to the IMF's more rigorous Special Data Dissemination Standard.
Fiscal strength score: baa3

baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
a1
a2
a3
b1
b2
b3
ca
Scale
+ Initial Final -
Vietnam baa3 Score for Vietnam Median of countries with Ba3 rating
DEBT BURDEN DEBT AFFORDABILITY

General government interest payments (% General government interest payments (%
General government debt (% of GDP) General government debt (% of revenue) of revenue) of GDP)
aaa
aa
baa
ba
caa
ca
Fiscal strength captures the overall health of government finances, incorporating the assessment of relative debt burdens and debt affordability as
well as the structure of government debt. Some governments have a greater ability to carry a higher debt burden at affordable rates than others.
Fiscal strength is adjusted for the debt trend, the share of foreign currency debt in government debt, other public sector debt and for cases in which
public sector financial assets or sovereign wealth funds are present. Depending on the adjustment factor, the overall score of fiscal strength can be
lowered or increased.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score will
appear in the table above.
We assess Vietnam's fiscal strength at “baa3”, below the initial score of “baa1”, to reflect potential for contingent liabilities from
state-owned enterprises (SOEs) to materialize. Our assessment incorporates a relatively high, but stabilizing debt burden, and
moderate debt affordability. It also takes into consideration the still-high sensitivity of the debt burden and debt servicing to exchange
rate depreciation, given that more than one-third of the debt stock is denominated in foreign currency. Over the past decade, the
government has benefited from a deepening of onshore capital markets and a shift in domestic investors’ risk appetite toward longer-
duration assets, consistent with better-anchored inflation expectations and lower domestic interest rates.
Exhibit 16
Peer comparison table factor 3: Fiscal strength
baa3
Vietnam Ecuador Morocco Bolivia Fiji Cyprus Montenegro
Median
Ba3/NEG Caa3/NEG Ba1/STA B1/NEG Ba3/STA Ba2/POS B1/STA
Final score baa3 ba1 baa3 ba1 ba1 baa2 baa3
Initial score baa1 ba1 baa3 ba2 baa3 baa2 baa1
Gen. gov. debt (% of GDP) 39.7 51.3 43.0 65.3 53.8 45.9 100.6 70.0
Gen. gov. debt (% of revenue) 194.2 220.3 228.4 249.4 192.0 161.2 256.5 165.7
Gen. gov. interest payments (% of GDP) 1.6 1.9 2.8 2.4 0.8 2.5 2.4 2.2
Gen. gov. int. payments (% of revenue) 7.7 8.1 14.7 9.3 2.8 8.9 6.2 5.1
2019 deficits were contained despite slowing revenue growth, but will widen in 2020
After recording four consecutive years of double-digit increases, revenue growth slowed sharply in 2019 to 2.3%. The deceleration was
led by a 29.1% fall in crude oil-related receipts and a 20.9% shrinkage in revenue from land user right assignments, while continued
growth in value-added tax (VAT), personal income tax and corporate income tax receipts reflected the health of the economy.
Since peaking in 2012 at 19.1% of total revenue, the contribution of crude oil-related receipts to the state budget has fallen
considerably to 3.2% in 2019. This is partly due to a concerted effort to diversify away from oil- and trade-related taxes toward
more stable domestic sources, such as VAT and income tax. By contrast, land user right assignments were an increasingly significant
contributor to total revenue before 2019; their share of revenue doubled to 10.4% over 2014-18, before falling to around 8% in 2019.
Restraint in expenditure almost matched the slowing in revenue. The rise in government spending fell significantly to 3.1% in 2019 from
nearly 20% in 2018, driven by an effort to prune both current and development spending. As a result, the government's preliminary
estimates for the fiscal shortfall in 2019 are largely unchanged from 2018 at around 2.8% of GDP, based on the revised national
accounts, in line with the Ba-rated median.
In line with other Ba credits, budgetary easing will widen Vietnam's ...although the rise in government debt will be more restrained
fiscal deficit in 2020... (General government debt, % of GDP)
(General government financial balance, % of GDP)
Vietnam Ba median Vietnam Ba median
0 70
-1 60
-2 50
-3 40
-4 30
-5 20
-6 10
-7 0
2015 2016 2017 2018 2019E 2020F 2015 2016 2017 2018 2019E 2020F
Also similar to rating peers, we expect the fiscal deficit will widen to 5.6% of GDP in 2020 on account of the impact of the coronavirus
outbreak and related oil price shock (see Exhibit 17).
In April, the government announced a tax support package totaling VND180 trillion (around $7.8 billion), including tax waivers, delayed
tax payments and reduction in land lease fees. The drop in oil prices is likely to continue to erode crude oil-related receipts, although
their currently small share will limit the impact on overall revenue collection. At the same time, domestic efforts to contain the
outbreak, such as enhanced social distancing measures and restrictions on cross-border travel, will combine with weakening global
demand to curb the tax take on trade, income and consumption.
On the expenditure side, central and local budgets have increased allocations to healthcare spending. The central budget also includes
VND517.7 billion of contingency reserves in 2020 to supplement epidemic prevention and control activities. In April, the government
issued a resolution raising social welfare spending, including direct cash transfers and zero-interest loans to finance payrolls. The
government also aims to speed up spending on infrastructure projects to stimulate growth.
Falling public debt and slowing government guarantee issuance reduces balance sheet risk
Despite a wider fiscal deficit in the next two years, we expect government debt will remain below 45% of GDP and lower than the Ba
median (see Exhibit 18). Ahead of the viral outbreak, we estimate that government debt had continued to stabilize, declining to 39.2%
in 2019 from a recent peak of 42.1% in 2016.
Wider public debt, which includes debt guaranteed by the government, has also likely continued to fall through 2019, although the
local authorities have yet to publish their estimates. Public debt had already fallen to 46.0% of GDP in 2018 from over 50% in 2016;
complementing lower direct government debt, guaranteed exposures also declined to 7.9% of GDP from 10.3% over the same period,
as the government narrowed the scope and tightened the extension of new guarantees.
The reduction in guaranteed issuance, coupled with limited official support for distressed SOEs, narrows the likelihood of contingent
risks from the sector crystallizing on the government's balance sheet. Moreover, partly on account of the recent revision to the national
accounts, public debt is well below the statutory debt ceiling, allowing for ample space to pursue countercyclical fiscal policy.
Reliance on domestic financing grows, lowering currency exposure but at higher cost
The government’s funding profile continues to gradually strengthen, as it progressively reduces its reliance on foreign-currency
financing to take advantage of ample domestic funding.
The volume of dong-denominated government bond issuance grew to $42 billion, or 15.1% of revised GDP in 2019 from just 3.9% in
2009, according to the Asian Development Bank (ADB, Aaa stable). As a result, we project the share of foreign currency-denominated
exposure has fallen to around 37% of total government debt in 2019 from over 60% in 2011(see Exhibit 19).
While reducing currency risk, the shift away from concessional external borrowing – loans from official bilateral and multilateral
creditors comprise the bulk of external debt as Vietnam is not a regular issuer in international bond markets – and toward more
market-based funding increases exposure to market volatility and interest rate risk.
We estimate interest payments as a share of revenue, our measure of debt affordability, increased to 8.6% in 2019 from 7.7% in 2018
and around 4% in 2011; nevertheless, Vietnam's debt servicing requirements remain more affordable than the Ba-rated median (see
Exhibit 20).
Vietnam's foreign currency exposure has steadily fallen as domestic Debt affordability is likely to deteriorate because of a shift toward
capital markets have deepened to domestic market funding and weaker revenue collection
(Government foreign currency-denominated debt as % of total government (Interest payments as % of government revenue)
debt)
Vietnam Ba median Vietnam Ba median
70 12
60 11
50
10
40
9
30
8
20
10 7
0 6
2015 2016 2017 2018 2019E 2020F 2015 2016 2017 2018 2019E 2020F
Susceptibility to event risk score: ba
Scale aaa aa a baa ba b caa ca

+ Final -
Score for
Vietnam ba Vietnam
Median of countries with Ba3 rating
Overall adjustment to Factor 4 Susceptibility to Event Risk: 0
MIN. EXTERNAL VULNERABILITY RISK
Political Risk Government Liquidity Risk Banking Sector Risk External Vulnerability Risk
aaa
aa
a
baa
ba
b
caa
ca
Susceptibility to event risk evaluates a country’s vulnerability to the risk that sudden events may severely strain public finances, thus increasing
the country’s probability of default. Such risks include political, government liquidity, banking sector and external vulnerability risks. Susceptibility
of event risk is a constraint which can only lower the scorecard-indicated outcome.
Note: the initial factor score is shown in light blue in the scale above. In case the initial and final factor scores are the same, only the final score
will appear in the table above.
Banking sector risk is the primary driver of Vietnam's “ba” susceptibility to event risk score.
Exhibit 21
Peer comparison table factor 4a: Political risk
Vietnam baa Median China Philippines Armenia Bangladesh Korea Taiwan

Ba3/NEG A1/STA Baa2/STA Ba3/STA Ba3/STA Aa2/STA Aa3/STA
Final score baa baa baa ba baa ba ba
Voice & accountability, score[1] -1.4 0.2 -1.4 0.0 -0.1 -0.7 0.8 1.0
Political stability, score[1] 0.2 0.1 -0.3 -1.1 -0.4 -1.0 0.5 0.9
[1] Composite index with values from about -2.50 to 2.50: higher values correspond to better governance.
Vietnam's political risk at “baa” is predominantly driven by the low probability, but high economic – and potentially fiscal – impact
of a conflict on the Korean Peninsula on Vietnam, given the large and expanding supply chain and trade linkages between Korea and
Vietnam. Vietnam also faces periodic tensions with China related to territorial disputes in the South China Sea.
By contrast, efforts to increase market access via international trade agreements, such as the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP), and those signed with European Union (Aaa stable, EU), and the Regional
Comprehensive Economic Partnership in Asia (RCEP), reflect increasingly strong ties with key partners. However, like many other
economies in the region that rely heavily on trade, Vietnam would suffer from protectionist measures that curtail global trade flows.
In 2019, for example, the US Treasury placed Vietnam on its Monitoring List of possible currency manipulators, exposing Vietnam to
tariffs or other unilateral measures by the US that could impede bilateral trade.
Vietnam faces comparatively low domestic political risk. Domestic political stability reflects the unchallenged primacy of the
Communist Party of Vietnam. There has been broad policy continuity following the change in leadership of the National Party Congress
of the Communist Party of Vietnam (CPV) in 2016. Future progress on key domestic reforms will be shaped by developments in the
political arena as the CPV begins to lay the groundwork for its new leadership over its next term in 2021-26.
Exhibit 22
Peer comparison table factor 4b: Government liquidity risk
Vietnam a Median Bangladesh Cambodia Morocco Bolivia Fiji Montenegro

Ba3/NEG Ba3/STA B2/STA Ba1/STA B1/NEG Ba3/STA B1/STA
Final score a baa a a baa baa baa
Initial score a baa a a baa baa baa
Ease of access to funding a a baa a a baa baa baa
Gross borrowing requirements (% of GDP) 6.2 7.1 4.8 0.4 9.9 7.4 6.4 7.7
Government liquidity risk at “a” reflects manageable gross borrowing requirements, in part because a significant portion of the
government debt stock is sourced at low borrowing costs and long tenors from concessional partners such as the ADB and World Bank
(IBRD, Aaa stable).
Although Vietnam has demonstrated access to international bond markets, it is not a regular issuer of foreign currency-denominated
debt.
Local currency-denominated issuance currently comprises the bulk of the government's gross borrowing requirements. The stable
domestic investor base insulates the government from direct effects of external financial shocks, with commercial banks, insurance
companies and social security institutions holding most of the debt. As of the end of 2019, less than 1% of outstanding domestic
currency bonds were held by foreign investors.
The growth of investable savings, in line with rising incomes and increasingly formalized employment, has also supported the issuance
of longer-tenor government bonds.
Exhibit 23
Peer comparison table factor 4c: Banking sector risk
Vietnam ba Median Brazil Kazakhstan Mongolia Bangladesh Bolivia Lebanon

Ba3/NEG Ba2/STA Baa3/POS B3/NEG Ba3/STA B1/NEG Ca/STA
Final score ba baa ba b ba baa caa
Initial score ba baa baa ba ba baa b
BCA[1] b1 b1 ba2 b1 b3 b2 b1 ca
BSCE[2] ba3-b3 ba3-b3 ba1-ba2 ba3-b3 ba3-b3 caa-c ba3-b3 ba3-b3
Total domestic bank assets (% of GDP) 153.3 89.6 119.8 40.8 102.0 64.8 78.7 453.9
[1] BCA is an average of Baseline Credit Assessments (BCAs) for rated domestic banks, weighted by bank assets.
[2] Where we have no or small rating coverage in a system, we estimate the risk of Banking Sector Credit Event (BSCE) based on available data for aggregate banking system.
Our “ba” assessment of banking sector risk incorporates the easing of the acute systemic risks that contributed to the downgrade
of Vietnam’s sovereign rating to B2 from B1 in 2012. Notwithstanding strengthening in asset performance, profitability and liquidity
in recent years, we changed the outlook for the Vietnamese banking system to negative in April 2020 to reflect the potential of the
coronavirus outbreak to disrupt these trends against a backdrop of still-low levels of capital compared with other systems.
We rate 19 banks in Vietnam, which together accounted for 73% of banking system assets at the end of 2019. Rated Vietnamese banks
posted solid profit growth and strengthening asset quality in 2019, benefitting from the country's robust macroeconomic environment.
The average ratio of problem loans to adjusted gross loans at rated banks declined to 4.0% at the end of 2019 from 5.1% a year earlier.
The average ratio of tangible common equity to total assets for rated banks rose to 6.9% at the end of 2019 from 6.2% a year earlier,
due to fresh capital from foreign investors as well as stronger bank internal capital generation. However, we believe solvency and
capitalization gains have mostly peaked, and risks are to the downside in 2020, exacerbated by the coronavirus outbreak.
A prolonged virus outbreak would lead to material increases in nonperforming loans (NPLs) across multiple sectors, particularly the
manufacturing and trade sectors, given Vietnam's large exposure to and close ties with global supply chains. Loan-loss reserves at
Vietnamese banks, which are still thin compared with other Asian banks, will provide limited buffers.
The State Bank of Vietnam (SBV) has implemented various measures, including a cut in policy lending rates in March and May this year.
Banks are also encouraged to offer loan forbearance, including reducing or delaying interest repayment, for affected borrowers. This will
somewhat soften the negative impact on asset quality.
The relief measures for borrowers, coupled with waning credit demand, will depress net interest margins. At the same time, a
deterioration in asset quality will lead to increases in loan-loss provisions and weigh on profitability.
While headline capital ratios will be stable as moderating asset growth offsets declines in profit, the quality of capital will deteriorate
as NPLs increase. Private sector banks can conserve capital by reducing cash dividend payouts or by paying dividends in stock. These
options, however, could be less viable for state-owned banks that have historically paid high dividends.
Prospects of foreign investment will dim in 2020, given the impact of the coronavirus outbreak on investment sentiment globally, and
this will make it more difficult for Vietnamese banks to raise external capital.
Funding and liquidity will be stable, but the risk of deposit loss will grow. Smaller banks are particularly vulnerable to large deposit
withdrawals that can be triggered by negative publicity amid weak depositor confidence. By contrast, for the overall system, slower
loan growth will ease the pressure to obtain market funding.
Exhibit 24
Peer comparison table factor 4d: External vulnerability risk
Vietnam a Median Azerbaijan Bangladesh Indonesia Bolivia Armenia Fiji

Ba3/NEG Ba2/STA Ba3/STA Baa2/STA B1/NEG Ba3/STA Ba3/STA
Final score a a a a baa baa aa
Initial score a a a a baa baa aa
Current account balance (% of GDP) 2.0 -2.4 12.8 -3.5 -2.9 -4.5 -9.4 -8.4
Net IIP (% of GDP)[1] -- -39.8 -- -9.9 -30.4 -10.8 -75.5 -84.4
External debt (% of current account receipts) 39.9 98.3 57.3 97.0 160.8 109.9 165.3 27.0
External vulnerability indicator (EVI)[2] 47.0 51.4 107.5 44.8 50.2 41.2 113.5 33.4
[1] Net international investment position (% of GDP).
[2] (Short-term external debt + currently maturing long-term debt + total nonresident deposits over one year)/official foreign exchange reserves.
External vulnerability risk at “a” reflects Vietnam's stable current account surplus and strong FDI inflows, which together have fortified
the country’s foreign exchange reserves and contributed to the trend decline in external vulnerability risk since the beginning of the
decade.
Rapid expansion in Vietnam’s exports, especially of manufactured goods, supported a substantial increase in the current account
surplus in 2019, despite a surge in imports, mainly of capital and intermediate goods (see Exhibit 25).
Vietnam's merchandise trade surplus widened to $10.9 billion in 2019, up from $6.8 billion in 2018, and has the overall trade balance
remained in surplus through the first quarter of 2020. However, a slowing in merchandise exports due to the slowdown in global
trade--and magnified by the coronavirus shock--has led to trade deficits in each of the first two month of the second quarter.
Consequently, we expect the current account surplus to narrow to approximately 1.1% of GDP in 2020 from 4.1% of GDP in 2019 and
2% of GDP in 2018.
Current account surplus widened since 2017, driven by robust Current account and financial account surpluses contribute to
exports growing foreign exchange reserves
(% of nominal GDP) (% of nominal GDP)
Goods balance Services balance Current account balance Financial account balance
Net primary income Net secondary income Net errors & omissions Reserve balance
Current account balance 15.0%
12.0%
10.0% 10.0%
8.0%
6.0% 5.0%
4.0%
2.0% 0.0%
0.0%
-2.0% -5.0%
-4.0%
-6.0% -10.0%
-8.0%
-10.0% -15.0%
2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019
Sources: Haver Analytics and Moody's Investors Service Sources: Haver Analytics and Moody's Investors Service
Net FDI and portfolio investment inflows have contributed to a growing capital account surplus. Total realized FDI was about $20.4
billion in 2019, up from $19.1 billion in 2018.
We expect capital account pressures to intensify in 2020 through weaker portfolio investment driven by the financial market
dislocation, as well as slower FDI growth as economic activities slow. Nevertheless, a combination of the small share of non-resident
holdings of local currency-denominated government bonds, the large proportion of official creditor holdings of external government
debt, and the small size of the domestic corporate bond and equity markets limits potential for capital flight.
Strong trends in trade and investment have supported the buildup of foreign-exchange reserves (see Exhibit 26). As of December 2019,
foreign exchange reserves accumulated to $78 billion, sufficient to cover 3.5 months of imports. Meanwhile, the dong remained largely
stable in 2019 and throughout the first four months of 2020.
A healthy reserve position, coupled with a robust external debt profile, characterized by concessional, long-tenor debt, supports
Vietnam's low vulnerability to external risks. We expect coverage of external debt repayments by foreign exchange reserves to remain
healthy, with our External Vulnerability Indicator (EVI) forecast to stay below 50% over 2020-21.
ESG considerations
How environmental, social and governance risks inform our credit analysis of Vietnam
Moody's takes account of the impact of environmental (E), social (S) and governance (G) factors when assessing sovereign issuers’
economic, institutions and governance, and fiscal strength and their susceptibility to event risk. In the case of Vietnam, the materiality
of ESG to the credit profile is as follows:
Environmental risks are material to Vietnam's sovereign rating. In particular, Vietnam is susceptible to rising sea levels and their
manifestation in more frequent and severe floods, which will over time leave a significant proportion of its land and population
exposed to submersion. The reliance of a substantial part of the population on agriculture exacerbates the potential economic and
fiscal impact of weather-related shocks, such as flooding and storm surges, as well as spillovers from the country's large and fast
growing manufacturing sector, such as pollution.
Social considerations are inherent to the sovereign's overall economic strength. On the back of reforms under “Doi Moi” that began
in the late 1980s, Vietnam has seen rapid economic growth, and a sharp fall in the poverty ratio. However, an expected decline in its
working-age population over the medium term presents new economic and fiscal challenges to Vietnam’s credit profile. We regard the
coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.
Governance poses material risks for Vietnam. This consideration is reflected in our assessment of institutions and governance
strength, which incorporates weak coordination and planning among various arms of the government – while still taking into account
a track record of effective economic policy that has maintained strong growth and a rise up the value chain. Our view also takes into
consideration the very gradual pace of SOE reform, and progress toward addressing outstanding fragilities in the banking sector.
All of these considerations are further discussed in the “Credit profile” section above. Our approach to ESG is explained in our report on
how ESG risks influence sovereign credit profiles and our cross-sector methodology General Principles for Assessing ESG Risks.
Scorecard-indicated outcome
Combining the scores for individual factors provides the scorecard-indicated outcome. While the information used to determine the grid mapping is mainly historical, our ratings
incorporate expectations around future metrics and risk developments that may differ from the ones implied by the scorecard-indicated outcome. Thus, the rating process is
deliberative and not mechanical, meaning that it depends on peer comparisons and should leave room for exceptional risk factors to be taken into account that may result in an
assigned rating outside the scorecard-indicated outcome. For more information please see our Sovereign Ratings Methodology.
Exhibit 27
Sovereign rating metrics: Vietnam
Economic How strong is the economic structure?

strength
Sub-factors: growth dynamics, scale of the economy, wealth
baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
a1
a2
a3
b1
b2
b3
ca
+ - Economic resiliency
baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
a1
a2
a3
b1
b2
b3
ca
Institutions How robust are the institutions and how predictable
and are the policies? + -
governance Sub-factors: quality of the institutions, policy effectiveness,
strength government default history and track record of arrears Government financial strength
baa1
baa2
baa3
baa1
baa2
baa3
caa1
caa2
caa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
a1
a2
a3
b1
b2
b3
a1
a2
a3
b1
b2
b3
ca
ca
+ - + -
Fiscal How does the debt burden compare with the

strength government's resource mobilization capacity?
Sub-factors: debt burden, debt affordability, debt trend, share of foreign
currency debt, contingent liabilities, fiscal reserves
Scorecard-
baa1
baa2
baa3
caa1
caa2
caa3
aaa
aa1
aa2
aa3
ba1
ba2
ba3
a1
a2
a3
b1
b2
b3
ca
indicated
+ - outcome:
Ba1 - Ba3
Susceptibility What is the risk of a direct and sudden threat to debt

to event risk repayment?
Sub-factors: political risk, government liquidity risk, banking
sector risk, external vulnerability risk Assigned
rating:
aaa
baa
caa
aa
ba
ca
Ba3
a
+ -
Source: Moody's Investors Service
This document has been prepared for the use of Rodolfo Larotta and is protected by law. It may not be copied, transferred or disseminated unless authorized under a contract with Moody's or otherwise
authorized in writing by Moody's.
Comparatives
This section compares credit relevant information regarding Vietnam with other sovereigns that we rate. It focuses on a comparison with sovereigns with similar ratings and shows
the relevant credit metrics and factor scores. Vietnam’s economy is characterized by features that reflect greater economic strength compared with Ba3- and B1-rated peers,
including its size, diversification, growth performance and competitiveness. Vietnam's somewhat weaker institutions and governance strength are mitigated by a more robust fiscal
profile, including lower debt. Banking sector risk similarly drives overall susceptibility to event risk compared with Bangladesh and Senegal (Ba3 stable), although external vulnerability
risk is less pronounced than for Honduras (B1 stable) or Turkey (B1 negative).
Exhibit 28
Vietnam's key peers
Vietnam Key Peers
Year Vietnam Bangladesh Cote d Ivoire Senegal Honduras Turkey Ba3 Median Asia Pacific Median
Rating/outlook Ba3/NEG Ba3/STA Ba3/STA Ba3/STA B1/STA B1/NEG Ba3 Baa2
Scorecard-indicated outcome Ba1 - Ba3 Ba2 - B1 Ba2 - B1 Ba2 - B1 Ba3 - B2 Ba2 - B1 Ba2 - B1 Baa1 - Baa3
Factor 1 a3 baa3 ba3 ba3 ba3 baa1 ba2 a3
Nominal GDP ($ bn) 2018 302.8 274.1 43.0 23.5 24.0 771.4 46.8 314.6
GDP per capita (PPP, Intl$) 2018 7,513 4,630 4,180 3,671 5,216 28,044 8,893 13,451
Avg. real GDP (% change) 2014 - 2023F 6.4 6.6 7.4 6.3 3.0 3.0 5.8 3.8
Volatility in real GDP growth (ppts) 2009 - 2018 0.6 0.8 4.5 2.1 2.0 4.4 2.2 2.2
Factor 2 b2 b2 b1 ba2 b2 b1 ba3 baa3
Quality of legislative & executive institutions Latest available caa b ba ba caa b ba baa
Strength of civil society & judiciary Latest available b caa ba ba caa b b ba
Fiscal policy effectiveness Latest available b b baa ba ba baa ba ba
Monetary & macro policy effectiveness Latest available ba ba ba ba b b ba baa
Gen. gov. fiscal balance (% of GDP) 2018 - 2020F -3.7 -4.9 -4.4 -3.8 -0.9 -5.0 -3.7 -3.7
Average inflation (% change) 2014 - 2023F 3.2 5.8 1.0 0.9 4.1 11.4 2.3 2.5
Volatility of inflation (ppts) 2009 - 2018 5.1 1.2 1.4 1.5 1.3 2.9 2.1 1.7
Factor 3 baa3 ba2 ba2 b2 ba2 baa2 ba2 baa3
Gen. gov. debt (% of GDP) 2018 39.7 28.0 48.6 54.7 41.2 30.4 47.3 36.3
Gen. gov. debt (% of revenue) 2018 194.2 289.8 244.3 294.1 155.9 96.6 233.5 202.2
Gen. gov. interest payments (% of revenue) 2018 7.7 19.2 9.1 11.6 8.4 6.9 9.6 6.7
Gen. gov. interest payments (% of GDP) 2018 1.6 1.9 1.8 2.2 2.2 2.2 2.1 1.7
Factor 4 ba ba baa baa ba b baa baa
Political risk Latest available baa baa baa a ba b baa baa
Government liquidity risk Latest available a baa baa baa a ba baa a
Gross borrowing requirements (% of GDP) 2019F 6.2 4.8 6.7 10.4 4.9 7.3 6.8 6.0
Banking sector risk Latest available ba ba a baa baa ba baa a
BSCE[1] Latest available ba3-b3 caa-c ba1-ba2 ba3-b3 ba3-b3 ba3-b3 ba1-ba2 baa3
Total domestic bank assets (% of GDP) 2018 153.3 66.1 41.3 39.4 78.2 103.8 72.2 119.8
External vulnerability risk Latest available a a aa a baa b a a
Current account balance (% of GDP) 2018 2.0 -3.5 -4.8 -8.9 -5.3 -2.7 -4.9 -2.1
External vulnerability indicator (EVI) 2020F 47.0 44.8 19.5 23.5 41.0 263.4 45.9 47.0
External debt (% of current account receipts) 2018 39.9 97.0 112.4 163.4 58.8 179.8 105.2 97.0
Net international investment position (% of GDP) 2018 -- -9.9 3.2 -43.8 -68.5 -47.8 -60.5 -12.0
[1] BSCE is our estimate of the risk of a Banking Sector Credit Event (BSCE), which we use for sovereigns where we have no or very limited rating coverage of a system. Otherwise, we use the Baseline Credit Assessment (BCA) for rated domestic banks,
weighted by bank assets.
Source: National authorities, IMF, Moody's Investors Service
DATA, CHARTS AND REFERENCES

Chart pack: Vietnam
Economic growth Investment and saving
Real GDP volatility, t-9 to t (ppts) (RHS) Gross investment/GDP Gross domestic saving/GDP
Real GDP (% change) (LHS) 50
8.0 1.6
45
7.0 1.4
40
6.0 1.2
35
5.0 1.0
30
4.0 0.8
25
3.0 0.6
20
2.0 0.4 15
1.0 0.2 10
0.0 0.0 5
2020F
2021F
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
2021F
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
National income Population
GDP per capita ($) GDP per capita (PPP basis, $) Population (Mil.) (LHS) Population growth (% change) (RHS)
8000 100.0 1.15
7000 98.0
1.10
96.0
6000
94.0
1.05
5000 92.0
4000 90.0 1.00
3000 88.0
0.95
86.0
2000
84.0
0.90
1000 82.0
0 80.0 0.85
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2011
2020F
2021F
2010
2012
2013
2014
2015
2016
2017
2018
2019
2020F
2021F
Global Competitiveness Index Inflation and inflation volatility
Rank 55 out of 138 countries
Inflation rate volatility, t-9 to t (ppts) (RHS)
Vietnam (Ba3/NEG) Inflation rate (CPI, % change Dec/Dec) (LHS)
20.0 7.0
18.0
Turkey (B1/NEG) 6.0
16.0
14.0 5.0
Cote d Ivoire (Ba3/STA)
12.0 4.0
10.0
Honduras (B1/STA) 3.0
8.0
6.0 2.0
Bangladesh (Ba3/STA) 4.0
1.0
2.0
Senegal (Ba3/STA) 0.0 0.0
2012
2020F
2021F
2010
2011
2013
2014
2015
2016
2017
2018
2019
0 20 40 60 80 100 120
Source: World Economic Forum Source: Moody's Investors Service
Institutional framework and effectiveness Debt burden
Government Effectiveness[1] Rule of Law[1] Gen. gov. debt/GDP (%) (LHS)
Control of Corruption[1] Voice & Accountability[1] Gen. gov. debt/gen. gov. revenue (%) (RHS)
Regulatory Quality[1] 50 300
0.2 45
0.0 250
40
-0.2 35
200
-0.4 30
-0.6 25 150
-0.8 20
100
-1.0 15
-1.2 10
50
5
-1.4
0 0
-1.6
2011
2016
2021F
2010
2012
2013
2014
2015
2017
2018
2019
2020F
2018
2009
2010
2011
2012
2013
2014
2015
2016
Notes: [1] Composite index with values from about -2.50 to 2.50: higher values suggest 2017 Source: Moody's Investors Service
greater maturity and responsiveness of government institutions.
Source: Worldwide Governance Indicators
Debt affordability Financial balance
Gen. gov. interest payment/GDP (%) (LHS) Gen. gov. financial balance/GDP (%)
Gen. gov. interest payment/gen. gov. revenue (%) (RHS) Gen. gov. primary balance/GDP (%)
1.8 10.0 1
1.6 9.0
0
1.4 8.0
7.0 -1
1.2
6.0 -2
1.0
5.0
0.8 -3
4.0
0.6
3.0 -4
0.4 2.0
-5
0.2 1.0
0.0 0.0 -6
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
2021F
2011
2016
2020F
2021F
2010
2012
2013
2014
2015
2017
2018
2019
Government liquidity risk External vulnerability risk
Gen. gov. debt/GDP (%) (RHS) External debt/CA receipts (%)(LHS)
Gen. gov. external debt/total gen. gov. debt (%) (LHS) External vulnerability indicator (%)(RHS)
80 50 60 120
70 45
50 100
40
60
35
40 80
50 30
40 25 30 60
30 20
20 40
15
20
10 10 20
10 5
0 0 0 0
2020F
2021F
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2017
2020F
2021F
2010
2011
2012
2013
2014
2015
2016
2018
2019
Rating history
Exhibit 41
Vietnam [1]
Long Term Ratings Outlook Review Action Short Term Ratings Action Date
Foreign Local Foreign Local Foreign Local

Currency Currency Currency Currency Currency Currency
Ba3 Ba3 NEG Confirmed Confirmed - - Dec-19

Ba3 Ba3 RUR Possible Downgrade Possible Downgrade - - Oct-19
Ba3 Ba3 STA - - - - Aug-18
B1 B1 POS - - - - Apr-17
B1 B1 STA - - - - Jul-14
B2 B2 STA - - - - Sep-12
B1 B1 NEG - - - - Dec-10
Ba3 Ba3 NEG - - - - Jun-08
Ba3 Ba3 POS - - - - Mar-07
Ba3 - STA - - - - Jul-05
B1 - POS - - - - Nov-03
B1 - - - - - - Jul-98
Ba3 - - - - - - Apr-97
Notes: [1] Table excludes rating affirmations and ceilings. Please visit the issuer page for Vietnam for the full rating history.
Annual statistics
Exhibit 42
Vietnam
2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020F 2021F
Economic structure and performance
Nominal GDP (US$ bil.)[1] 143.2 171.4 195.3 212.9 233.0 236.9 252.3 277.2 302.8 326.8 343.9 378.6
Population (Mil.) 86.9 87.8 88.8 89.8 90.7 91.7 92.7 93.6 94.6 95.5 96.4 97.3
GDP per capita (US$)[1] 1,648 1,952 2,199 2,372 2,568 2,583 2,721 2,960 3,202 3,423 3,567 3,891
GDP per capita (PPP basis, US$) 4,394 4,717 5,004 5,312 5,672 6,049 6,422 6,918 7,513 -- -- --
Nominal GDP (% change, local currency)[1] 19.3 29.2 15.1 9.8 10.3 5.1 8.6 11.6 10.7 8.9 5.5 11.2
Real GDP (% change)[1] 6.4 6.4 5.5 5.6 6.4 7.0 6.7 6.9 7.1 7.0 2.5 7.2
Inflation (CPI, % change Dec/Dec) 11.7 18.1 6.8 6.0 1.8 0.6 4.7 2.6 3.0 5.2 3.0 4.0
Gross investment/GDP[2] 28.1 23.4 21.7 21.4 21.4 22.4 21.2 21.1 21.1 20.1 21.1 21.0
Gross domestic saving/GDP[2] 42.9 43.3 43.9 42.6 42.5 40.0 40.1 40.7 41.1 42.2 41.1 42.6
Nominal exports of G & S (% change, US$ basis)[3] 26.8 32.7 17.4 14.9 13.0 7.5 9.1 20.7 13.3 8.6 -0.9 9.8
Nominal imports of G & S (% change, US$ basis)[3] 19.8 25.1 7.0 17.0 11.6 11.8 6.8 21.4 10.9 6.6 1.9 9.4
Openness of the economy[4][3] 116.6 125.4 123.4 131.2 134.7 145.2 147.2 162.2 166.5 166.0 158.4 157.7
Government Effectiveness[5] -0.3 -0.2 -0.3 -0.3 -0.1 0.1 0.0 0.0 0.0 -- -- --
Government finance
Gen. gov. revenue/GDP[6] 21.5 20.4 18.0 18.5 17.8 19.2 19.5 20.6 20.4 19.2 16.9 17.5
Gen. gov. expenditures/GDP[7] 23.6 21.2 23.5 24.4 23.1 24.3 24.0 21.5 23.2 22.0 22.5 22.2
Gen. gov. financial balance/GDP[7] -2.9 -1.1 -3.2 -4.9 -5.4 -4.3 -4.4 -1.3 -2.7 -2.8 -5.6 -4.8
Gen. gov. primary balance/GDP[7] -2.0 -0.3 -2.2 -3.7 -4.0 -2.8 -2.8 0.3 -1.2 -1.1 -4.1 -3.2
Gen. gov. debt (US$ bil.) 45.3 52.0 61.4 72.4 85.4 91.8 104.4 114.0 119.4 128.5 146.3 162.8
Gen. gov. debt/GDP 32.2 30.9 31.4 34.2 37.0 39.8 42.1 41.1 39.7 39.2 42.8 43.2
Gen. gov. debt/gen. gov. revenue 150.0 151.4 174.0 184.5 208.1 206.8 215.5 200.0 194.2 204.3 253.2 247.4
Gen. gov. interest payments/gen. gov. revenue 4.3 4.1 5.4 6.5 7.6 8.2 7.9 7.6 7.7 8.6 8.7 8.7
Gen. gov. FC & FC-indexed debt/gen. gov. debt 59.7 61.1 56.9 49.9 44.4 42.0 39.9 40.2 38.6 36.7 32.6 29.6
External payments and debt
Nominal exchange rate (local currency per US$, Dec) 19497.5 21023.5 20825.0 21095.0 21372.5 22485.0 22740.0 22690.0 23180.0 23170.0 23401.7 23635.7
Real eff. exchange rate (% change) -5.0 -1.2 9.2 8.0 5.0 9.7 4.3 -2.4 -2.5 -- -- --
Current account balance (US$ bil.) -4.3 0.2 9.3 8.1 9.1 -2.0 0.6 -1.7 6.1 13.3 3.8 6.6
Current account balance/GDP -3.0 0.1 4.7 3.8 3.9 -0.9 0.2 -0.6 2.0 4.1 1.1 1.7
External debt (US$ bil.) 44.9 53.9 61.6 65.5 72.4 77.8 85.7 104.1 108.1 113.1 114.3 118.3
Public external debt/total external debt 73.0 68.2 64.9 65.6 61.9 59.6 56.1 49.8 49.3 48.6 48.7 47.9
Short-term external debt/total external debt 15.4 20.0 20.0 18.6 18.8 15.4 14.8 21.0 18.1 17.9 17.6 17.0
External debt/GDP 31.4 31.5 31.5 30.8 31.1 32.8 34.0 37.6 35.7 34.6 33.2 31.2
External debt/CA receipts[8] 51.0 46.9 46.5 42.8 42.2 42.7 43.1 43.6 39.9 38.4 39.4 37.2
Interest paid on external debt (US$ bil.) 0.8 1.0 1.3 1.2 1.4 1.7 1.6 2.3 3.5 3.7 3.9 3.9
Amortization paid on external debt (US$ bil.) 1.1 3.1 3.3 3.3 5.3 4.9 5.7 11.2 14.9 15.7 16.4 16.5
Net foreign direct investment/GDP 5.0 3.8 3.7 3.3 3.5 4.5 4.6 4.9 4.9 4.8 4.4 4.2
Net international investment position/GDP -- -- -- -- -- -- -- -- -- -- -- --
Official forex reserves (US$ bil.) 12.1 13.1 25.2 25.5 33.8 27.9 36.2 48.7 55.1 78.0 77.6 79.6
Net foreign assets of domestic banks (US$ bil.) 0.1 -0.1 -0.4 3.4 4.8 10.1 6.4 7.4 12.1 -- -- --
2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020F 2021F
Monetary, external vulnerability and liquidity indicators
M2 (% change Dec/Dec) 29.7 11.9 24.5 21.4 19.7 14.9 17.9 14.3 12.7 12.0 -- --
Monetary policy rate (% per annum, Dec 31)[9] 9.0 15.0 9.0 7.0 6.5 6.5 6.5 6.3 6.3 6.0 -- --
Domestic credit (% change Dec/Dec) 31.9 13.9 0.9 12.5 14.2 17.3 18.2 18.2 10.8 13.6 -- --
Domestic credit/GDP 98.2 86.5 75.9 77.7 80.4 89.7 97.6 103.4 103.5 108.0 -- --
M2/official forex reserves (X) 10.5 10.1 6.6 7.8 7.0 9.2 8.3 7.0 6.9 5.4 -- --
Total external debt/official forex reserves 372.8 410.7 244.9 257.0 214.3 279.2 236.9 213.8 196.3 145.1 147.3 148.6
Debt service ratio[10] 2.1 3.6 3.4 3.0 3.9 3.6 3.7 5.7 6.8 6.6 7.0 6.4
External vulnerability indicator (EVI)[11][12] 36.4 83.1 107.1 62.1 68.6 54.8 63.6 66.3 75.6 64.0 47.0 47.2
Liquidity ratio[13] 148.8 216.2 173.0 142.6 114.8 94.9 123.7 110.7 99.4 -- -- --
Total liabilities due BIS banks/total assets held in BIS banks 323.0 340.4 263.9 267.3 214.6 266.7 301.8 232.5 242.7 -- -- --
"Dollarization" ratio[14] 18.0 16.8 13.4 13.9 12.4 12.7 10.4 9.4 9.7 -- -- --
"Dollarization" vulnerability indicator[15] 93.0 85.1 54.6 60.7 52.7 60.3 50.9 40.5 39.6 -- -- --
Notes:
[1] Based on revised national accounts published in December 2019
[2] Based on previous national accounts series; revised national accounts do not have a breakdown by expenditure
[3] BOP basis
[4] Sum of Exports and Imports of Goods and Services/GDP
[5] Composite index with values from about -2.50 to 2.50: higher values suggest greater maturity and responsiveness of government institutions
[6] On budget only; excludes 'Brought forward expenditures'
[7] Includes off budget expenditures; excludes 'Brought forward expenditures'
[8] Current Account Receipts
[9] Base interest rate before 2011, refinancing rate thereafter
[10] (Interest + Current-Year Repayment of Principal)/Current Account Receipts
[11] (Short-Term External Debt + Currently Maturing Long-Term External Debt + Total Nonresident Deposits Over One Year)/Official Foreign Exchange Reserves
[12] Excludes nonresident deposits
[13] Liabilities to BIS Banks Falling Due Within One Year/Total Assets Held in BIS Banks
[14] Total Foreign Currency Deposits in the Domestic Banking System/Total Deposits in the Domestic Banking System
[15] Total Foreign Currency Deposits in the Domestic Banking System/(Official Foreign Exchange Reserves + Foreign Assets of Domestic Banks)
Moody's related publications

Rating Action
» Moody's confirms Vietnam's ratings at Ba3, changes outlook to negative, 18 December 2019
Credit Opinion
» Government of Vietnam – Ba3 negative: Update following forecast change, 9 April 2020
Sector In-Depth
» Sovereigns – Global: Coronavirus and oil price shock magnify weaknesses highlighted in negative 2020 outlook, 20 March 2020
» Infrastructure & project finance - Infrastructure in Emerging Markets: Focus on Vietnam, 6 February 2020
Outlook
» Global Macro Outlook 2020-21 (April 2020 Update): Global recession is deepening rapidly as restrictions exact high economic cost,
28 April 2020
» Banking System Outlook Update - Vietnam: Outlook changed to negative as coronavirus outbreak poses unprecedented challenges,
2 April 2020
Rating Methodology
» Sovereign Ratings Methodology, 25 November 2019
To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All
research may not be available to all clients.
Related websites and information sources
» Sovereign risk group web page
» Sovereign ratings list
» General Statistics Office of Vietnam
» Ministry of finance
MOODY’S has provided links or references to third party World Wide Websites or URLs (“Links or References”) solely for your convenience in locating related information and services.
The websites reached through these Links or References have not necessarily been reviewed by MOODY’S, and are maintained by a third party over which MOODY’S exercises no control.
Accordingly, MOODY’S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on
any third party web site accessed via a Link or Reference. Moreover, a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided
by any third party.
Authors
Christian de Guzman
Senior Vice President
Claire Long
Associate Analyst
Endnotes
1 We rate seven out of 10 countries in ASEAN, namely, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Thailand and Vietnam
2 Ratio of the sum of the population aged 0-14 and that aged 65+ to the population aged 15-64.
3 See 2019 Global Competitiveness Report, World Economic Forum
4 See https://freedomhouse.org/country/vietnam/freedom-world/2020
5 There is a statutory limit of 65% of GDP for public and publicly guaranteed debt; before the rebasing of the national accounts, we estimate that the limit
was almost reached with direct government debt peaking at 52.6% of GDP in 2016 and government guarantees amounting to over 10% of GDP at the
same time.
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SOVEREIGN AND SUPRANATIONAL

RATINGS OVERVIEW AND OUTLOOK

Scorecard impact of revised national accounts

2 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Economic strength score: a3

Factor 1: Overall score

weight 25% weight 10% weight 30% weight 35%

Peer comparison table factor 1: Economic strength

3 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Strong growth interrupted by coronavirus shock

4 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Trade tensions accelerated trend of diversion and supply chain reconfiguration

5 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

2018 2019 Indonesia Korea Malaysia

Sources: National authorities, Haver Analytics and Moody's Investors Service

Growth potential supported by strengthening competitiveness and a large working population

6 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Note: Higher ECI score = more complex

Climate change risk weighs on economic strength

7 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Institutions and governance strength score: b2

Vietnam b2 Score for Vietnam Median of countries with Ba3 rating

QUALITY OF INSTITUTIONS POLICY EFFECTIVENESS

weight 20% weight 20% weight 30% weight 30%

Peer comparison table factor 2: Institutions and governance strength

Vietnam b2 Median Azerbaijan Bangladesh Guatemala Cambodia Laos Bolivia

8 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Recent delay of debt payments weigh on the quality of institutions

Vietnam Bangladesh Government Effectiveness Rule of Law

Voice and Control of 10

Macroeconomic stability amid strong growth supports policy effectiveness

9 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

10 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Fiscal strength score: baa3

DEBT BURDEN DEBT AFFORDABILITY

weight 25% weight 25% weight 25% weight 25%

11 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Source: Moody's Investors Service Source: Moody's Investors Service

12 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Source: Moody's Investors Service Source: Moody's Investors Service

13 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Susceptibility to event risk score: ba

Factor 4: Overall score

Scale aaa aa a baa ba b caa ca

Overall adjustment to Factor 4 Susceptibility to Event Risk: 0

MIN. EXTERNAL VULNERABILITY RISK

Vietnam baa Median China Philippines Armenia Bangladesh Korea Taiwan

14 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Vietnam a Median Bangladesh Cambodia Morocco Bolivia Fiji Montenegro

Vietnam ba Median Brazil Kazakhstan Mongolia Bangladesh Bolivia Lebanon

15 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Vietnam a Median Azerbaijan Bangladesh Indonesia Bolivia Armenia Fiji

16 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

17 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

18 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

Economic How strong is the economic structure?

Fiscal How does the debt burden compare with the

Susceptibility What is the risk of a direct and sudden threat to debt

Source: Moody's Investors Service

19 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

20 31 May 2020 Government of Vietnam – Ba3 negative: Annual credit analysis

DATA, CHARTS AND REFERENCES

Source: Moody's Investors Service