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Saturday, October 24, 2009

S & P raised ratings outlook of Indonesia


S & P raised ratings outlook of Indonesia
'Indonesia a step to achieve investment grade'

JAKARTA: Credit rating company, Standard & Poor's (S & P), raised ratings outlook for Indonesia from stable to positive in line with the fiscal management capacity and improving public debt ratios. Its also related with the strong enough accumulation of foreign reserves exchange.

Bank Indonesia said in a press release yesterday, S & P rating outlook to set long term local currency sovereign credit rating to BB +. While long term outlook for foreign currency sovereign credit rating of BB-.

Net central government debt is projected to drop to 32% of GDP in 2009, from 34% in 2008.

Meanwhile, central bank policy to cut interest rates to lowest level in the last 9 months in order to boost consumer spending could bring Indonesia to avoid the worst impacts of global recession.

Pacific Investment Management Co., which has a global managed funds up to U.S. $ 842 billion, said Indonesia assessing a step to achieve investment grade ratings in 3 to 5 years.

"Indonesia, India, and China are relatively better able to control the global crisis due to sustained domestic demand, supported by a large population, as the main bearings," said Chia-Liang Lian, Pimco fund manager in Singapore, as quoted by Bloomberg, yesterday.

In December 1997, the economic crisis in Asia forced the country with the largest economy in Southeast Asia ask IMF to help lend around U.S. $ 23 billion for the reserves exchange. After the crisi, Indonesia forced to remove the investment grade given by Moody's Investors Service and S & P.

Furthermore, on September 16, 2009, Moody's raised Indonesia's debt level to the highest point in the last 11 years, along with the ability to survival ability in the global recession.

Head of Debt Capital Markets PT BNI Securities Sukartono should assess Indonesia's national ranking improved, given the length of the ranking was not reviewed.

"It seems that Indonesia's current ranking is not based on the current economic condition is very good, especially in the last year that even the [Indonesian condition] better than the condition of other countries a higher predicate."

He said the resistance of the Indonesian economy and debt management while facing the global crisis after subprime mortgage crisis is relatively large.

Indonesian industrial sector, he said, is not so affected as well as several other neighboring countries that experienced significant economic decline.

Rahmat Waluyanto, Director General of Debt Management Office - Ministry of Finance tells the increase in rating outlook reflects the significant improvement of the economy and finance of Indonesia.

"This is the result of prudent fiscal management and a credible monetary so that Indonesia can pass the economic crisis and the financial markets well," he said.

According to him, the credit rating will actually go up if Indonesia can improve its performance in the next 1-2 years. Primarily, through policy or policy reform program in fuel subsidies and electricity.

Although the country economic fundamentals are good enough, Indonesia Finance Minister Sri Mulyani Indrawati said the creation of economic growth and uneven quality is a pressing task that still needs government attempted. This is closely related to poverty reduction and employment creation. (16/21) (gajah. kusumo@bisnis.co.id)

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