Fitch upgrades RI's sovereign rating<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
International rating agency Fitch Ratings said on Thursday it had
\nupgraded Indonesia's currency rating by one notch, a move that
\ncould help improve investor confidence ahead of the government's
\ninternational bond offering next year.<\/p>\n
Fitch upgraded the long-term foreign currency rating to B+
\nfrom B with a stable outlook, citing improving stability in the
\ncountry's macroeconomy and declining trends in the government's
\ndebt level to around 70 percent of gross domestic product (GDP)
\nfrom 100 percent of GDP in 2000.<\/p>\n
\"The upgrade of the sovereign ratings primarily reflects
\nsustained improvements in the public finances that compare
\nfavorably with other similarly rated countries such as Brazil and
\nTurkey,\" Fitch said.<\/p>\n
It said that although the country's economic growth of around
\n4 percent was still below the 7 percent of the pre-crisis boom
\nperiod, the economy had displayed remarkable resilience against a
\nhost of shocks including terror attacks, SARS and the Iraq war.<\/p>\n
Despite the upgrade, the country's rating remains below
\ninvestment grade. But the rating upgrade could be seen as a vote
\nof confidence in the country's economy.<\/p>\n
\"This (the rating upgrade) is positive news because this means
\nthey (international rating agencies) are not saying bad things
\nabout our economy,\" Citibank economist Anton Gunawan told The
\nJakarta Post.<\/p>\n
\"The trend ahead will continue to improve if no significant
\n(negative) development occurs,\" he added.<\/p>\n
A few months ago, rival rating service, Standard & Poor's
\n(S&P) had also raised its long-term foreign and local currency
\nratings for Indonesia by one notch to B from B- and to B+ from B,
\nrespectively. The upgrade came around a week after Moody's
\nInvestor Services raised the sovereign rating one notch from B3
\nto B2. Indonesia enjoyed an investment grade rating of BBB from
\nS&P during the pre-crisis period, but various problems affecting
\ninvestment here have made it very difficult to return to that
\nlevel.<\/p>\n
Supporting views from international rating agencies will be
\ncrucial for the government which is planning to issue around
\nUS$400 million in international bonds in the first quarter of
\nnext year in a bid to help raise funds to finance the state
\nbudget deficit as the country will no longer be allowed to
\nreschedule debts from the Paris Club of creditor nations after
\nthe IMF's existing program expires later this year.<\/p>\n
Although the size of the bond offering is relatively small, it
\nis hoped that it can provide some crucial momentum for the
\neconomy as it would be the first international bond issue since
\nthe 1997 regional financial crisis hit the country.<\/p>\n
During an international roadshow to Singapore and Hong Kong
\nearlier this week, officials of the finance ministry and Bank
\nIndonesia met with the above rating agencies and institutional
\ninvestors to drum up support for the bond plan.<\/p>\n
According to Bank Indonesia Governor Burhanuddin Abdullah,
\ninvestors were encouraged by improving stability in the country's
\neconomy, and suggested that the size of the bond issue should be
\nincreased to around $1 billion.<\/p>\n
But he said that it would be up to the Ministry of Finance to
\ndecide the size of the bond issue, and that will depend on the
\nneeds of the state budget.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fitch-upgrades-ris-sovereign-rating-1447893297",
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"sponsor": "Okusi Associates",
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