Moody's paints positive outlook for RI

Moody's paints positive outlook for RI

The Jakarta Post, Jakarta

International credit rating agency Moody's Investors Service has
maintained its positive outlook for Indonesia, on the back of the
country's political stability and continued commitments to
reform.

"This (positive outlook) is due to a diversified economy that
helps check volatility, increased -- though not perfect --
political stability, and progress in reform that has been
achieved since the election of President Megawati Soekarnoputri
in 2001," Moody's vice president Steven Hess said in the agency's
annual report, as reported by Dow Jones.

The U.S.-based agency said the country had made some progress
in several key areas of its reform program, especially in its
asset sales, including crucial privatization and divestment of
government shares in recapitalized banks.

Despite constant public pressure against selling national
assets, Indonesia has been making some headway in the two
programs.

Only recently, the government sold its stake in the country's
second largest telecommunications firm PT Indosat. The government
has also started the divestment process of Bank Danamon.

Moody's also pointed to a stable fiscal performance as another
reason for the encouraging note on Indonesia.

"The government's fiscal performance is also better," said
Hess. "The budget deficit target was met in 2002, and the
government's revised fiscal targets for 2003 appear achievable,
although the margin for error is not great."

Nevertheless, the agency also noted some areas the country
needed to address.

It said that Indonesia's B3 country ceiling for foreign
currency debt reflected the continued fragility of its external
finances due to a lack of investor confidence, continued weakness
in the banking sector and high public-sector debt.

It also warned of a possible worsening of the country's
financial condition next year, when it terminates the existing
role of the International Monetary Fund in designing reform
programs.

The economic ties between Indonesia and the IMF, which was
started in 1999, ends at the end of this year.

However, debates have already been intensified over the need
for the country to quickly split from the IMF, with critics
saying that many of the IMF's programs have played a part in
pushing the economy deeper into crisis.

"Statements from some in the government concerning relations
with the IMF are causing us to look closely at the country's
financial position next year," Hess said.