Indonesia's debt rating hiked

MEDAN - The international rating institute Standard and Poor's (S&P) on April 8, 2011, raised Indonesia's long-term foreign currency rating to BB+ while at the same time set a positive outlook from the earlier BB, while sovereign rating for long-term local currency remained unchanged at BB+ with a positive outlook.

The increased rating brought Indonesia's sovereign rating according to S&P to another notch toward investment grade.

This rating is the same as that set by other international rating institution, namely Fitch which has earlier upgraded to BB+ with a positive outlook on February 24, 2011. A positive outlook reflected the possibility that Indonesia would have a further increase.

In a press release in Jakarta Tuesday main sovereign analyst of S&P for Indonesia Agost Benard said the chief factor for the increased rating was the continued increase in financial capacity of the government and external liquidity with the support of the strong economic condition and careful fiscal management.

In the meantime, Bank Indonesia Governor Darmin Nasution said that upgrading of the S&P is a recognition of the result of coordination of policies of the government and Bank Indonesia to strengthen economic fundamentals in maintaining sustainable a high economic growth momentum.

Increase in sovereign rating this time also indicated an increase in the international world's optimism on Indonesia's economic performance prospects.

In greater detail, the S&P saw the improvement in the government's financial performance reflected by the drop in the government's debt burden and increased foreign exchange revenue as key to Indonesia's raised rating.

But several obstacles and risks are still facing the economy like the relatively high pressures of the inflation and qualitative factors like bureaucratic reforms, legal certainty, and the stiff manpower market.

In the meantime, the positive outlook of S&P reflected the possibility of a further upgrading if the inflation rate could be lowered, increase in the government's financial performance continued, and a successful agenda of structural reforms.

Fitch Ratings also pointed out that Indonesia's long-term foreign and local currency issuer default ratings (IDRs) at BB+ a revision of the outlook to become both positive and stable, on February 24, 2011.

Earlier, on February 17, 2011, Moody's Investors Service also raised Indonesia's Sovereign Credit Rating to Ba1/stable outlook, or one notch before entering the rating investment grade position.

Upgrading the rating which is also an increase in the rating of government's bonds in foreign or local currency, is carried out following the decision of Moody in December last year placing Indonesia in a review for possible upgrade position.

source : waspada.co.id