Duff maintains Indonesian ratings

Duff maintains Indonesian ratings

HONG KONG (Dow Jones): Duff & Phelps Credit Rating Co. said Thursday that it is maintaining its triple-C long-term foreign currency issuer rating on Indonesia, and it single-B-minus long- term foreign currency rating on Indonesia's Yankee bond due 2006.

The outlook on the ratings remains stable.

The statement comes a day after the surprise election of Abdurrahman Wahid, also known as Gus Dur, as president. Gus Dur is a highly influential Muslim leader and chairman of Indonesia's largest Muslim organization.

"Gus Dur is a compromise figure who can be accepted by various parties in Indonesia," said Pram Kurniawan, a Duff & Phelps analyst, in a statement.

Duff & Phelps said it will "closely monitor political and economic policy developments in Indonesia in the coming months," and warned that a weak coalition government in Indonesia could stall reforms.

With no single party winning a majority in the June elections, Gus Dur is expected to seek a government involving a number of political parties that may include Megawati Soekarnoputri's Indonesian Democratic Party for Struggle, or PDI-P, as well as the Golkar party, said the ratings agency.

"The involvement of various parties with differing interests in the new government may result in a weak coalition and delay crucial reforms, which would hinder the much-awaited economic recovery in Indonesia," said Duff & Phelps.

The ratings agency also cited concerns over Gus Dur's poor health, which could lead to political leadership uncertainties in the long run.

The new president must face a raft of economic, social, and political challenges. The growing public debt burden could rise to 85 percent of gross domestic product next year, so the resumption of multilateral aid is key to Indonesia's economic reforms, government finance and the flow of foreign investment, said Duff & Phelps.