Moody's puts RI on review for possible upgrade
Moody's puts RI on review for possible upgrade
The Jakarta Post, Jakarta
A substantial reduction in government debt ratios and reduced
external vulnerability have prompted Moody's Investors Service to
place Indonesia's ratings on review for possible upgrade.
The ratings under review are the B3 foreign currency country
ceiling for debt, the B3 rating of the foreign currency bonds of
the government of Indonesia, the B3 domestic currency issuer
rating of the government, and the Caa1 foreign currency bank
deposit ceiling.
Moody's said on Thursday in a statement that the country's
improved debt ratios were due to the fiscal policy that had been
pursued by the government and to the strengthening of the
exchange rate.
In addition, the external vulnerability of the country has
been considerably reduced as the current account has remained in
surplus, external debt of both the government and the private
sector has been restructured, and international reserves have
risen.
Despite these improvements, the rating agency believed that
Indonesia remained vulnerable to unforeseen shocks, either
internal or external.
In addition, economic growth has not yet returned to a rate
that would contribute to increases in employment and living
standards over the medium term. As a result, political and social
stability could also be vulnerable to any negative shocks.
"Improvements in the investment climate could alleviate some
of this problem," it said.
The review of the ratings will concentrate on the country's
external financing requirements and their viability over the next
couple of years.
The Indonesian government is considering whether or not to
request a new IMF program after the expiration of the current
extended facility at the end of this year. The country's external
financial position could be more vulnerable than otherwise
without further funding from the IMF and the option of a third
Paris Club rescheduling of official bilateral debt.
In a related development, Moody's placed the Caa1 long-term
bank deposit country ceiling ratings of eight Indonesian banks on
review for possible upgrade.
The eight banks are Bank Danamon Indonesia, Bank Internasional
Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Permata,
Bank Rakyat Indonesia, Bank Tabungan Negara and Pan Indonesia
Bank.
At the same time, the agency placed on review for possible
upgrade the B3 senior debt ratings for Bank Mandiri and Bank
Negara Indonesia. The Not-Prime short-term deposit and bank
financial strength ratings of all eight banks are unaffected.
In addition, the B3 subordinated debt ratings of Bank Mandiri
and Bank Negara Indonesia are unaffected. The ratings are
detailed below.
"This action follows the placement of Indonesia's sovereign
ratings - B3 foreign currency country ceiling for debt, B3
foreign currency bonds of the government, B3 domestic currency
issuer rating of the government and Caa1 foreign currency bank
deposit ceiling - on review for possible upgrade," it said.