Fitch Ratings says risks to Vietnam from real estate has eased

THE risk that Vietnam’s government may be burdened by debt in the property sector has eased, according to Fitch Ratings, even as the company warned that uncertainty persists.

“With interest rates having fallen back, the associated stress has peaked and worst-case scenarios that might have seen contingent liabilities migrate to the sovereign balance sheet appear much less likely,” Fitch analysts including Sagarika Chandra said in a statement on its website on Tuesday (Jul 18).

Vietnam has stepped up measures to curb risks in the property sector, including tightening control in lending to some segments including high-end real estate projects. Fitch said the nation still faces risks given possible delays in policy implementation following a corruption crackdown while reserve buffers against potential future external shocks have weakened.

The government has set its sights on financing practices among developers while its anti-graft crackdown -- which has caught-up hundreds of government officials and business executives -- has also reverberated in the property sector. BLOOMBERG