Fitch upgrades Indonesia`s sovereign credit rating to `BB`, outlook stable
Jakarta (ANTARA News/Thomson Financial) - Fitch Ratings said Thursday it has upgraded Indonesia's long-term foreign and local currency issuer default ratings
(IDRs) to "BB" from "BB-" as the country is making progress in boosting its investment climate.
The outlook for both ratings is stable.
Fitch said at the same time, it has upgraded the country ceiling to "BB+" from "BB" and affirmed the short-term rating at "B".
"The government's efforts to tackle corruption, bureaucratic and regulatory hindrances to investments intensified in 2007 and were complemented by key investment legislation as well as an economic policy package specifically aimed at addressing main investor concerns," says Ai Ling Ngiam, Director in Fitch's Sovereign Ratings team.
"Positive economic growth and balance of payments implications had already become evident in 2007, enabling Indonesia to enter the current period of tightened global credit conditions and weaker external demand on a firmer footing," she said.
Indonesia's pragmatic macroeconomic policies have returned the economy to a stronger and broader-based GDP growth path of above 6 percent since the fourth quarter of 2006, it said.
The recovery in household demand, which constitutes over 60 percent of nominal GDP, should partially offset a slowdown in external demand, while the uptick in local and foreign private sector investment will support the medium-term growth, it said.
On the external front, a strong build-up in official foreign exchange reserves based on higher non-oil exports, buoyant portfolio debt and equity inflows and long-term equity investment inflows have provided a more comfortable cushion to deal with possible shocks.
Looking ahead, Indonesia's external balance sheet risk remains as an uptick in emerging market risk aversion could lead to a disruptive outflow of portfolio equity or debt investment, said Fitch. (*)
(IDRs) to "BB" from "BB-" as the country is making progress in boosting its investment climate.
The outlook for both ratings is stable.
Fitch said at the same time, it has upgraded the country ceiling to "BB+" from "BB" and affirmed the short-term rating at "B".
"The government's efforts to tackle corruption, bureaucratic and regulatory hindrances to investments intensified in 2007 and were complemented by key investment legislation as well as an economic policy package specifically aimed at addressing main investor concerns," says Ai Ling Ngiam, Director in Fitch's Sovereign Ratings team.
"Positive economic growth and balance of payments implications had already become evident in 2007, enabling Indonesia to enter the current period of tightened global credit conditions and weaker external demand on a firmer footing," she said.
Indonesia's pragmatic macroeconomic policies have returned the economy to a stronger and broader-based GDP growth path of above 6 percent since the fourth quarter of 2006, it said.
The recovery in household demand, which constitutes over 60 percent of nominal GDP, should partially offset a slowdown in external demand, while the uptick in local and foreign private sector investment will support the medium-term growth, it said.
On the external front, a strong build-up in official foreign exchange reserves based on higher non-oil exports, buoyant portfolio debt and equity inflows and long-term equity investment inflows have provided a more comfortable cushion to deal with possible shocks.
Looking ahead, Indonesia's external balance sheet risk remains as an uptick in emerging market risk aversion could lead to a disruptive outflow of portfolio equity or debt investment, said Fitch. (*)