Ratings agencies says RI's future still uncertain<\/p>\n
NEW YORK (Dow Jones): The peaceful ascension of Megawati
\nSoekarnoputri to the Indonesian presidency alone isn't enough to
\nhelp the country's near-term outlook, according to two major
\nratings agencies.<\/p>\n
Indonesian lawmakers voted overwhelmingly Monday to replace
\nPresident Abdurrahman Wahid with political rival Megawati, who
\nhad served as vice president for nearly two years. When the
\ndisgraced Abdurrahman refused to quit his job and leave the
\npresidential palace, he got little support from the military and
\nthe courts. The national assembly had been attempting to impeach
\nhim for months for alleged corruption and incompetence.<\/p>\n
\"The fact that President Abdurrahman has been replaced without
\nlarge scale social unrest is a positive,\" said Ashok Bhatia, the
\nprimary analyst for Indonesia at Standard & Poor's Corp.<\/p>\n
But Bhatia added that the recent developments hadn't come as a
\nsurprise, and that lingering uncertainty could continue to
\nconstrain Indonesia's long-term foreign currency ratings of
\ntriple-C plus with a negative outlook, a mere two notches above a
\ndefault rating.<\/p>\n
\"We feel that even in a best-case scenario Indonesia is
\nunlikely to be able to manage without further Paris Club
\nreschedulings,\" Bhatia said in reference to the umbrella group of
\nsovereign creditors.<\/p>\n
Abdurrahman has left a daunting mess for Megawati to clean up.
\nLast spring the International Monetary Fund canceled around $400
\nmillion of funding to the country, saying Indonesia failed to
\nhonor commitments made earlier in return for the money. The IMF
\nhas made a string of demands, including a privatization program
\nand reassurance that the central bank will remain autonomous.<\/p>\n
\"Megawati needs to come out with a strong statement affirming
\nthe independence of the central bank, without delay,\" Bhatia
\nsaid.<\/p>\n
A couple of weeks ago an IMF mission indicated that it had
\nfinally reached agreement with the Indonesian government, which
\nhas said IMF disbursements could finally restart in August.<\/p>\n
\"I think (the IMF) will wait and see if the new government can
\nperform\" before taking action, said Steven Hess, lead analyst for
\nIndonesia at Moody's Investors Service. \"They've already had the
\nexperience of being disappointed.\"<\/p>\n
Megawati, the daughter of founding president Sukarno, is
\nIndonesia's fourth president in little more than three years.<\/p>\n
Indonesia's ratings, which are currently two notches above
\nMoody's lowest rung at B3 with a stable outlook, aren't likely to
\nchange in the upward direction any time soon, Hess said.<\/p>\n
\"If the new government can regain the confidence of the
\npopulace at large, this could be a turning point,\" he said. \"But
\nthe problems they have to cope with are so large, it's hard to
\ntell right now whether they'll be effective.\"<\/p>\n
Megawati has offered few details about how she plans to turn
\naround Indonesia's struggling economy.<\/p>",
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