Fitch Upgrades Indonesia’s Sovereign Credit Rating From BBB-/ Positive Outlook to BBB/ Stable Outlook - Bank Sentral Republik Indonesia
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April 22, 2018
No. 19/98/DKom

Fitch Ratings (Fitch) upgrades the Sovereign Credit Rating of the Republic of Indonesia from BBB-/ Positive Outlook to BBB/Stable Outlook as announced on December 20th, 2017.

In its press release, Fitch highlighted two key drivers that support the decision. First, Indonesia’s resilience to external shocks has strengthened as macroeconomic policy have consistently been geared towards maintaining stability. This is reflected in a more flexible exchange rate policy, foreign reserve buffers that have swelled, monetary policy that has been able to limit bouts of volatile capital outflows, implementation of macro-prudential measures to curb a rise in corporate external debt, financial deepening that has coincided with an improvement in market stability, and credible assumptions evident in the Government’s budgets. Second, the government’s concerted structural reform drive is improving a still challenging business environment as reflected in a strong improvement in Indonesia’s position in the Ease of Doing Business. The reforms also seem to be contributing to a strengthening of the external finances, as Foreign Direct Investment (FDI) has picked up to such an extent that Fitch expects net FDI to cover the current account deficit over the next few years.

Fitch also acknowledged that Indonesia’s GDP growth continues to be strong and general-government debt burden remains low compared with peers. Moreover, the sovereign's exposure to banking-sector risks is limited, supported by capital adequacy ratio which continues to be strong and NPLs that have stabilised. However, Fitch noted two concerns that need to be improved, namely average per capita GDP and government revenue intake which remain low compared with peers.

In response to the statement, Governor of Bank Indonesia, Agus D.W. Martowardojo stated that “Fitch’s upgrade on Indonesia’s rating is a great achievement that we welcome as the BBB level is the highest rating that Indonesia has attained since 1995. Such an achievement demonstrates Indonesia’s success in maintaining macroeconomic and financial system stability as the foundation for a sustainable economic growth. Going forward, Bank Indonesia will continue its commitment in maintaining macroeconomic and financial system stability to support a strong, sustainable, balanced, and inclusive economic growth.”

Fitch Ratings had previously affirmed Indonesia’s Sovereign Credit Rating at BBB- /Positive Outlook on July 20th, 2017.

Jakarta, 21 December 2017
Communication Department

Deputy Director



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