Moody's upgrades Indonesia's rating<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Moody's Investors Service, an international rating agency, has
\nupgraded Indonesia's sovereign rating by one notch, in light of
\nthe country's stronger external financial footing and falling
\ngovernment debts.<\/p>\n
The country's rating was raised from B3 to B2 on Tuesday in
\nwhat economists called \"a vote of confidence\" in the government's
\nability to service its foreign debts next year, after its
\nborrowing program with the International Monetary Fund (IMF) ends
\nthis year.<\/p>\n
The new rating is still five levels below investment grade.<\/p>\n
Nevertheless, the upgrade should help ease investors' fear
\nthat the government would stick to its economic reform programs
\nwithout the IMF's presence, Standard Chartered economist Fauzi
\nIchsan said.<\/p>\n
\"It's perfect timing. When the decision (on exiting the IMF
\nprogram) was made, many doubted the government's commitment to
\neconomic reform, (so) the upgrade should reduce such concerns,\"
\nFauzi told The Jakarta Post. He added that it was also an
\nindication that the government was on the right track to shaping
\nup the economy.<\/p>\n
Moody's says Indonesia's plan to finance its exit from the IMF
\nprogram appears achievable in 2004, \"provided there are no major
\nshocks to confidence that could affect private capital flows\".<\/p>\n
Another rating agency, Standard and Poor's, had made a similar
\nmove in May.<\/p>\n
The rupiah was the first to benefit from the news.<\/p>\n
The local currency closed on Tuesday at Rp 8,410 per U.S.
\ndollar, stronger than 8,420 the day before. The rupiah even
\nreached an intraday high of 8,385 before heavy dollar buying
\npushed it down, dealers said.<\/p>\n
Dealers also attributed a 0.1 percent rise in the Jakarta
\nComposite Index to Moody's upgrade. The stock index closed at
\n597.65, down from an intraday high of 601.19.<\/p>\n
\"The rating improvement should not only help the rupiah, but
\nalso help in raising investors' interest in plans to sell local
\nassets, including Bank Internasional Indonesia (BII),\" Fauzi
\nsaid.<\/p>\n
A 71 percent stake in BII is up for sale in efforts to
\nrestructure the country's banking system.<\/p>\n
Minister of Finance Boediono said the upgrade would help boost
\nthe interest of foreign investors to buy the planned $400 million
\nsovereign global bond next year, the first bond issue since the
\neconomic crisis of 1997.<\/p>\n
Moody's also said in a statement that Indonesia had been
\nmaking progress in strengthening its external financial position,
\nas evident in its rising foreign reserves.<\/p>\n
It said the increasing foreign reserves, which now stand at
\nUS$33 billion, had certainly helped reduce the country's
\nvulnerability to external shocks.<\/p>\n
Moody's also pointed to the fairly steep decline in the
\ngovernment debt ratio, which is estimated to fall to 69 percent
\nof the gross domestic product by year's end, from around 100
\npercent in 2000. This, in turn, should reduce the risk for
\ninvestors in buying government debt.<\/p>\n
However, while it predicated a stable outlook with the new
\nratings, Moody's reiterated that the country would still be
\nfacing uncertainties in times to come.<\/p>\n
\"Uncertainty surrounding the outcome of the 2004 elections and
\nthe threat of renewed terrorism are among the most important
\nrisks to the outlook.<\/p>\n
\"Nonetheless, these risks do not appear incompatible with a B2
\nrating,\" said Moody's<\/p>\n
\"Eye box\"<\/p>\n
Upgraded Moody's Ratings<\/p>\n
No. Category Old New<\/p>\n
Rating Rating
\n-----------------------------------------------------------
\n1. Foreign currency country ceiling for B3 B2<\/p>\n
bonds; foreign currency rating for<\/p>\n
govt bonds
\n2. Foreign currency country ceiling Caa1 B3<\/p>\n
for bank deposits
\n3. Domestic issuer rating of the govt B3 B2
\n4. Long-term bank deposit country ceiling Caa1 B3<\/p>\n
ratings of 8 banks: Bank Danamon<\/p>\n
Indonesia, Bank Internasional Indonesia<\/p>\n
(BII), Bank Mandiri, Bank Negara<\/p>\n
Indonesia (BNI), Bank Permata, Bank<\/p>\n
Rakyat Indonesia (BRI), Bank Tabungan<\/p>\n
Negara (BTN) and Pan Indonesia Bank
\n5. Senior debt ratings: Bank Mandiri & BNI B3 B2
\n-----------------------------------------------------------<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/moodys-upgrades-indonesias-rating-1447893297",
"image": ""
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"sponsor_url": "https:\/\/okusiassociates.com"
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