Fitch may upgrade RI's rating
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.