Indonesia's risk rating ugraded to BBB-

Indonesia's risk rating ugraded to BBB-

KUALA LUMPUR (Reuter): The U.S. rating firm Thomson BankWatch announced it has upgraded Indonesia's country risk rating to BBB- from BB+.

"Indonesia has continued to demonstrated strong economic resilience against a backdrop of slower regional trade and weaker global demand for Asian exports," the rating agency said in a statement.

It said Indonesia has maintained economic growth at over seven percent over the past seven years, but kept a lid on inflation, which fell to 6.5 percent last year.

This has attracted heavy foreign investment, which has doubled in the last few years and pushed up foreign reserves to over $18 billion last year.

Most of the foreign investments were long-term, it said. "As a result, even with last year's political flare-ups and the continued political uncertainty over the post-Suharto succession, Indonesia's financial markets and overall business environment have remained relatively stable," Betty J. Starkey, BankWatch's director of sovereign risk said in the statement.

The stability of the financial markets had provided "solid grounds for raising the country's sovereign risk rating to investment grade", he said.

BB+ rating is considered non-investment grade.