S&P affirms Vietnam

Standard & Poor's said it affirmed its BB/B foreign-currency and BB+/B local-currency sovereign credit ratings on the Socialist Republic of Vietnam.

The outlook is stable.

The agency said the ratings on Vietnam reflect its low-income economy and developing financial system, which increase the vulnerability of the economy to severe shocks that could significantly increase the public financial burden. In addition, S&P said the strain of necessary infrastructure building is heavy at this stage of Vietnam's economic development, and this prevents the government from building up an adequate financial buffer against potential economic shocks.

Nevertheless, structural reforms and infrastructure upgrades implemented in recent years have helped to lift growth prospects for the Vietnamese economy, S&P said, and the brighter economic outlook has attracted larger investment flows into the country, which have in turn lifted the central bank's foreign exchange reserves holdings and strengthened the economy's net external position.

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