Moody’s says Vietnam’s deficit to increase amid infrastructure splurge

[HANOI] Vietnam’s fiscal deficit and public debt are expected to increase as the country invests in large infrastructure projects, Moody’s Ratings said in a statement on Thursday.

The debt burden is expected to remain lower than in its peers, and the banking sector is set to benefit from planned reforms that could limit its exposure to the real estate sector, Moody’s said.

Vietnam launched infrastructure projects worth around US$200 billion last year, and is targeting a deficit of 4.2 per cent of its gross domestic product this year, up from 3.8 per cent in 2025. That will increase public debt, although Moody’s projected it to remain lower than peers at around 40 per cent of GDP by the end of the decade.

A wide-ranging reform agenda launched under top leader To Lam is also expected to benefit banks and reduce their exposure to the real estate sector, Moody’s said.

Loan growth to the sector rose to 42 per cent by the end of September compared to a year earlier, above an average of 27 per cent between 2022 and 2024, Moody’s said, noting that exposure was expected to stabilise this year. REUTERS