Standard & Poor's raised Indonesia's credit rating yesterday amid signs that south-east Asia's largest economy is on track for strong growth in spite of political infighting.
Indonesia's economy and currency were among the best performing in the world in 2009. The Jakarta stock index jumped 87 per cent while the rupiah rose more than 15 per cent.
Economic growth last year topped 4 per cent and the central bank on Thursday raised its forecast for 2010 for the second time this week, to 6-6.5 per cent.
S&P lifted its long-term foreign currency sovereign credit rating to BB from BB-. It is Indonesia's first upgrade for four years and took the rating to its highest level since 1998, putting Jakarta on a par with Turkey. Fitch and Moody's have also upgraded Indonesia in recent months.
Sri Mulyani Indrawati, Indonesia's finance minister and the architect of recent reforms, said this week she hoped the country would earn an investment grade rating from Moody's within a year, which would require a move up one more notch.
S&P's move was a sign of confidence as reformers face attacks over the $715m bail-out of a small lender in 2008. Mrs Sri Mulyani and Boediono, the vice-president who was central bank chief until last year, have been threatened with impeachment but analysts believe the attempt to unseat them will fail.
Indonesia's evolving economic health may help to attract foreign investors as it prepares to raise $1.1bn through a samurai bond issue.
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