Standard and Poor's (S & P) today (March 12, 2010) upgraded Republic of Indonesia’s long-term foreign currency rating to BB from BB-, and long-term local currency rating remained at BB+. Outlook for both ratings is positive. With the rating upgrade, now Indonesia is 2 notches closer to investment grade, and positive outlook also indicates that Indonesia has big possibility to be upgraded in one year.
In his press release, the main sovereign analyst for S & P Indonesia, Agost Benard, said that the main factor supporting this decision is steadily improving debt metrics and growing foreign currency reserves which reduced vulnerability to shock with continued cautious fiscal management.
Deputy Governor of Bank Indonesia, Hartadi A. Sarwono said that the rating upgrade is already expected and it is about time they finally upgrade us since S & P rating were the lowest one compared to the rating assigned by Moody's (Ba2/stable) and Fitch (BB+/ stable).
The positive outlook given by S&P reflects their positive expectations that the structural reform agenda, economic and fiscal policy to support higher economic growth will continue to be implemented as the political pressures are diminishing and believed to be only a temporary distraction.
As stable macroeconomic fundamentals, intensified external liquidity, gradually declining government debt ratio, supported by cautios fiscal management and implementation of structural reforms, is expected to sustain economic growth in up coming years, hopefully the positive momentum can be maintained to achieve investment grade target.
Jakarta, March 12, 2010
Office of The Governor
Dyah N.K Makhijani