RI's credit rating faces challenges: U.S. agency<\/p>\n
NEW YORK (AFP): The U.S. agency Standard and Poor's on
\nThursday warned that Indonesia's credit rating depended on how
\neffectively its new leaders restore order, complete corruption
\nprobes and deal with the army.<\/p>\n
Standard and Poor's, in an assessment following the election
\nof Indonesian President Abdurrahman Wahid and Vice President
\nMegawati Soekarnoputri, said the new team faces \"multiple
\npolitical and economic pressures.\"<\/p>\n
The agency noted that the triple-C-plus long-term foreign
\ncurrency credit and unsecured debt ratings it has assigned to
\nIndonesia suggest \"a high risk of default\" on the country's
\nUS$2.3 billion foreign currency commercial debt.<\/p>\n
It said the first priority for the new administration was the
\nrestoration of law and order following protests by Megawati
\nsupporters following her surprise defeat in Wednesday's
\npresidential ballot in the Consultative Assembly.<\/p>\n
Other tests for the new team will be to ensure that corruption
\ninvestigations do not delay economic policy measures and to
\n\"maintain cordial relations with the army, which remains a major
\nforce in Indonesian politics.\"<\/p>\n
Standard and Poor's called for continued commitment by the
\ngovernment to central bank independence and to low inflation as
\nwell as the resolution of a scandal at Bank Bali.<\/p>\n
Principal payments on the country's general government debt,
\nwhich now amounts to 110 percent of gross domestic product, are
\nset to increase from about $2 billion in 1999 to $5 billion next
\nyear and $9 billion in 2001-2002.<\/p>\n
Standard and Poor's predicted that another round of debt
\nrestructuring by Indonesia's official creditors in the Paris Club
\nwould be necessary to support expansionary budgets in 2000 and
\n2001.<\/p>\n
But the agency did not rule out the possibility that Jakarta
\nmight go further and seek both debt reduction and rescheduling.<\/p>\n
\"Over the long term ... a substantial reduction in Indonesia's
\nexternal debt burden is likely to be necessary to support
\neconomic recovery and to rebuild the (government's) credit
\nrating,\" it said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ris-credit-rating-faces-challenges-us-agency-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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