Fitch raises RI rating

Fitch raises RI rating

HONG KONG (Dow Jones): Fitch Inc. said Friday it raised its
outlook on Indonesia's sovereign rating to positive from stable,
after the reinstatement of a stalled International Monetary Fund
program.

Fitch said its B rating for Indonesia's long-term foreign
currency and long-term local currency is unchanged, as is its B
rating for short-term foreign currency, applicable to issues with
an original maturity of up to one year.

Fitch said the IMF's approval on Sept. 10 of a disbursement of
US$395 million under Indonesia's three-year extended fund
facility, which had been suspended since December 2000, marked
the culmination of several months of positive political and
economic developments.

"Political risk has diminished considerably with the peaceful
mid-term transition of the presidency from the lame-duck
administration of Abdurrahman Wahid to Megawati Soekarnoputri in
late July," it said.

Fitch argues that the Megawati administration offers the best
prospect yet of economic reform and recovery.

"(But) despite its more upbeat assessment, Fitch says high
levels of sovereign indebtedness continue to constrain the
ratings to low sub-investment grade, putting Indonesia's on a par
with Turkey and Argentina," the statement said.

It said future rating actions will depend on the government's
continued commitment to macro-economic stabilization and reform,
with particular reference to privatization and asset sales, and
corporate and financial sector restructuring.

Public debt management will also be key, it said, as well as
the progress of fiscal decentralization.