RI sovereign debt a laggard in Asia: S&P

RI sovereign debt a laggard in Asia: S&P

SINGAPORE (Dow Jones): Indonesia's political turmoil, weak currency, and lagging reform make its sovereign debt the "weakest credit story" in Asia, Standard & Poor's Managing Director for Sovereign Ratings David Beers said Monday.

However the completion of a debt restructuring agreement with Indonesia's commercial creditors could trigger an upgrade in its long-term foreign credit rating from "selective default" next month, Beers told a seminar on Asian sovereign debt.

Among the problems affecting Indonesia is its high level of public debt, which is now more than 110 percent of gross domestic product, Beers said.

The country also suffers from uncertainties regarding legal reform, the quality of bank lending and the sale of assets by the government-run Indonesia Bank Restructuring Agency, he said.

"There has been disappointment in the efforts by the Wahid government," Beers added.

Indonesia is working with the Paris Club of creditors to restructure $850 million of syndicated loans that are in default. The restructuring is expected to be completed next month.