Rating and Investment Information, Inc. Upgrades Indonesia’s Sovereign Credit Rating From BBB-/Positive Outlook to BBB/Stable Outlook - Bank Sentral Republik Indonesia
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March 19, 2018

No. 20/ 18 /DKom

Rating and Investment Information, Inc. (R&I) upgrades the Sovereign Credit Rating of the Republic of Indonesia from BBB-/Positive Outlook to BBB/Stable Outlook as announced on March 7th, 2018.

In its press release, R&I highlighted that the key drivers that support the decision was Indonesia's economy which continues its strong performance, with inflation remaining low and stable, fiscal deficits that have been reined in, and low government debt. R&I also acknowledged that the economy is becoming more resilient to external shocks, reflected in small current account deficits and ample foreign reserves. In addition, infrastructure development shows some progress and the investment climate is also improving. R&I noted that the government's efforts in regards to the size of tax revenue, such as reinforcing the tax-collecting base, is viewed favorably. Moreover, R&I believes that the policy stance focused on macroeconomic stability and the series of initiatives for structural issues will be maintained amid political events including local elections in 2018 and the general and presidential election in 2019.

R&I views that the economic trend is expected to continue for the foreseeable future, inflation to stay at 3-4% under the central bank's prudent monetary policy, the stable financial system will unlikely be undermined, the current account deficit will most likely widen slightly but only to around 2%, and the fiscal deficit is unlikely to widen beyond the ceiling of 3% of GDP.

In response to the statement, Governor of Bank Indonesia, Agus D.W. Martowardojo stated that “The upgrade on Indonesia’s rating to BBB level by R&I, the third consecutive time following the rating upgrades from Fitch Ratings and Japan Credit Rating Agency, has confirmed further the international stakeholders’ confidence on Indonesia’s strong economic fundamentals. This recognition is supported by the effectiveness of the Government and Indonesia’s authorities policies in maintaining macroeconomic and financial system stability as well as the Government’s commitment in implementing its structural reforms. This positive momentum needs to be concertedly maintained to ensure economic stability to be in place to achieve a strong, sustainable, and inclusive economic growth for Indonesia. In this regard, Bank Indonesia will optimise its policy mix including putting in place exchange rate stabilisation measures to be in line with its fundamental value dan financial market deepening initiatives to maintain macroeconomic stability”.

R&I had previously revised the outlook on the Sovereign Credit Rating of the Republic of Indonesia from Stable to Positive and affirmed Indonesia’s BBB- (Investment Grade) issuer rating on April 5th 2017

Jakarta, 07 March 2018
Communication Department   
Executive Director


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