IBCA may cut RI rating

Sat, 13 Jun 1998, 00:00 WIB | Source: REUTERS

LONDON (Reuters): Fitch IBCA said yesterday it was keeping the
rating on Indonesia at B minus and on RatingAlert negative
despite the recent debt agreement the country signed with a
steering committee of 13 banks.

The deal represented an important step on the long road
towards regaining access to international capital markets, the
rating agency said in a statement.

"However, the agency warns that it would be wrong to regard
this as an overnight panacea for resolving the country's external
payment difficulties."

The external payment situation remained "extremely fragile".

"Unlike the other troubled Asian nations Korea and Thailand,
Indonesia has yet to see a strong rebound in its current account
position."

"Recent steps to liberalize the foreign investment climate and
accelerate privatization are to be welcomed, but those alone will
not reverse the outflow," Fitch IBCA added. "Economic
stabilization must come first."

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