HANOI: Vietnam was one of the more notable improvers in Euromoney’s risk survey last year among the emerging and frontier markets across Asia. The country gained a point overall in the survey’s scoring mechanism, resulting in a total risk score of 43.0 points from a maximum 100.
That was won by general secretary Nguyen Phu Trong forcing out prime minister Nguyen Tan Dung, a political rival, and although the country has seen more repression, an ensuing corruption purge and sweeping overhaul of the civil service promises a more efficiently run bureaucracy.
Despite the improving risk score, Vietnam remains well below tier-three status in Euromoney’s survey commensurate with investment grade. Analysts taking part in the survey remain cautious over bank stability due to a high non-performing loan problem on loans to SOEs, which is no doubt larger than the authorities claim. The survey score for government finances is low, with a fiscal deficit of 3.7% of GDP targeted for 2018, and a debt burden that is close to the 65% limit determined by the National Assembly, the 500-member unicameral legislature that meets twice per year. This debt has increased sharply during the past decade owing to sizeable primary budget deficits and is elevated for a frontier market, and unsustainable in the long-run. Fortunately, the deficits have narrowed from around 6% of GDP in previous years and privatization will bring in a useful stream of receipts.
