No. 24/168/DKom 

Rating and Investment Information, Inc. (R&I) has affirmed Indonesia's Sovereign Credit Rating at BBB+ (investment grade) with a stable outlook, as announced today, July 4, 2022. According to R&I, key factors that support the decision are external stability supported with continued economic recovery and improving fiscal condition. Although the inflation rate is rising gradually, there is room for monetary policy to maneuver. The fiscal position will likely improve against the backdrop of rising commodity prices.

In response to the decision, Governor of Bank Indonesia, Perry Warjiyo, stated that R&I's affirmation on Indonesia's rating at BBB+/stable outlook shows strong confidence from international stakeholders on the Indonesia's maintained macroeconomic stability and a favorable medium-term economic prospects, amidst heightened global economic uncertainty, emerging risk of stagflation due to the increase in global policy rate amid global economic recovery, as well as the expansion of inward-looking policies in some countries.  This supported by the credibility of the policies and the effective policy mix of Bank Indonesia and the Government. Going forward, Bank Indonesia will continue to closely monitor global and domestic economic and financial developments, formulate and execute the necessary policy measures to ensure macroeconomic and financial stability, including adjusting policy stances when necessary, as well as continue to strengthen the synergy with the Government to accelerate the national economic recovery.

R&I expected that Indonesia's economy will likely remain firm in 2022. The government projects a real GDP growth in the range between 4.8% and 5.5%. To alleviate the impact of rising commodity prices on inflation, the government has increased the expenditure related to subsidies and social protection (shock absorber), which will be financed through windfall revenues from higher commodity prices. The government projects a fiscal deficit of 3.9% of GDP in 2022, narrowing from 4.6% of GDP in 2021. The government debt recorded at 40.7% of GDP as of 2021-end, still a low level relative to the rating.

On the external front, the current account deficit recorded a small surplus in 2021, owing to the improvement of terms of trade resulting from the rising commodity prices, and it remains in surplus in the first quarter of 2022. The current account balance is expected to swing back into the deficit territory in 2022 in a manageable range, thus supporting the external resilience of Indonesia. Foreign reserves were US$135.6 billion as of end-May 2022, which covers more than six months of imports and servicing government's external debt and is well above the country's external debt due within one year.

R&I had previously affirms Indonesia Sovereign Credit Rating at BBB+ with stable outlook (two level above the lowest level of investment grade) on April 22, 2021.

Jakarta, 4 July 2022
Head of Communication Department

Erwin Haryono