Asia need to adjust oil policies: S&P
Asia need to adjust oil policies: S&P
Asian countries need to change their energy policies in response to record high oil prices, a conference of leading business executives was told here on Thursday.
International ratings agency Standard and Poor's said oil prices were a key threat to sovereign credit ratings and Asian countries that failed to adjust policies would see increased exchange rate and fiscal risks.
"Some countries will be hit harder because of the dependence on oil for some and also because of policies that encourage fuel consumption above what they usually should," SP director of sovereign and international public finance ratings Takahira Ogawa told the Forbes Global CEO Conference in Sydney.
Ogawa said there were questions about whether fuel policies were appropriate in Indonesia, the Philippines and to some extent Japan.
SP associate director for sovereign ratings and finance ratings, Agost Benard, said the fall in value of Indonesia's rupiah might alter his firm's outlook on the country although its underlying rating would not be affected.
"We are closely monitoring the situation -- what we would like to see is the government address the underlying causes in a collective and robust manner -- unfortunately we have not seen that materialize," Benard said.
Indonesian President Susilo Bambang Yudhoyono said on Wednesday the government would not raise fuel prices at least until October, disappointing many who felt immediate action was necessary.
SP said separately in a report that current Indonesian fuel subsidies were unsustainable.
"There is keen awareness of the unsustainability of subsidies at this level and that letting the (fiscal) deficit blow out could exacerbate inflation, adding further pressure on interest rates, the currency and hurting investor confidence," SP said.
It said fuel subsidies remained the Indonesian administration's biggest near-term challenge, with pressure building for additional, politically-difficult subsidy cuts. -- AFP