Fitch may upgrade RI's rating

Rendi A. Witular, The Jakarta Post, Jakarta

London-based Fitch Ratings may upgrade Indonesia's rating soon on the basis of improving macroeconomic stability, Bank Indonesia Governor Burhanuddin Abdullah said on Thursday.

"We have met with Fitch officials in London. They will visit the country in November to review their rating. This will help our efforts to further improve the economy," Burhanuddin told the press on Thursday.

Burhanuddin was among some of the country's top officials who recently launched a road show in the financial centers of London, New York and Dubai to brief international investors about the government's economic reform programs after the end of the International Monetary Fund's economic bailout program. The IMF program will end later this year.

The road show was also aimed at promoting the country's planned US$400 million international bond offering, which is crucial for helping finance the state budget.

Burhanuddin explained that should Fitch upgraded the country's rating, as Moody's did recently, the move would boost international business confidence in Indonesia.

The upgrade would also help boost the interest of foreign investors in taking up the planned $400 million issue of sovereign global bonds next year, the first bond issue by the government since the economic crisis of 1997.

Indonesia's current rating with Fitch is "B" with stable outlook, still four notches below "BBB" or investment grade, which indicates no risks for investors.

On Tuesday, Hong Kong-rating agency Moody's Investors Service upgraded Indonesia's sovereign rating by one notch in light of the country's stronger external financial footing and falling government debt.

The country's rating was raised from B3 to B2, but again this is still five levels below investment grade.

Burhanuddin explained that to attain investment grade, Indonesia still needed some time to implement the White Paper on the post-IMF reform program.

"We can achieve investment grade by maintaining macroeconomic stability, increasing fiscal and foreign exchange reserves, continuing financial sector reform and increasing investment, exports and job opportunities," said Burhanuddin.

When asked about the reactions from investors to the White Paper during the road show, Burhanuddin said the investors welcomed the program.

He explained that the investors mostly asked about Indonesia's ability to sustain its macroeconomic stability, to lower the inflation and interest rates, and to stabilize the rupiah.