Rupiah assigned B-3 rating

Rupiah assigned B-3 rating

NEW YORK (Dow Jones): Moody's Investors Service said it
assigned a B3 issuer rating to rupiah obligations of Indonesia.

Issuer ratings are used to provide an opinion about the debt-
service capacity of a government that may have no outstanding
long-term general obligation debt, Moody's said.

Moody's said that the government of Indonesia, "although
heavily indebted in foreign currencies, has until now not
financed its budget deficits through the issuance of long-term
domestic bonds.

"Although Bank Indonesia, the country's central bank, has
issued short-term notes for monetary policy purposes, the
government has no long-term bonds denominated in rupiah. Moody's
believes that this could change in the future, as the government
is now in a period of substantial budget deficits as a result of
the severe economic downturn affecting the country," Moody's
said.

Moody's said the B3 rating "reflects the government's heavy,
and rapidly increasing, debt burden. Because of the large
depreciation of the rupiah during the last year, the ratio of
Indonesia's public sector debt to GDP has risen to a very high
level.

"At the same time, the budget deficit during the current year
is likely to reach 10 percent of GDP, financed mainly by
borrowing from foreign official creditors. The government is in
the process of rescheduling some of this debt.

"Thus, Moody's believes that the government's ability to meet
its obligations, whether domestic or foreign, is likely to remain
under strain for some time to come," the rating agency said.