S&P affirms RI's long term rating

S&P affirms RI's long term rating

SYDNEY (Reuter): Standard and Poors Corp (S&P) said yesterday
it had affirmed Indonesia's long term foreign currency rating at
BBB and assigned its A-plus local currency rating.

S&P said the outlook for the ratings was stable.

S&P said the ratings are supported by Indonesia's long
standing commitment to prudent fiscal management.

Savings and investment rates of over 30 percent of GDP,
amongst the highest in the BBB category, should substain GDP
growth averaging eight percent annually, it said.

"The higher rupiah credit rating standing is further supported
by the central government's insignificant rupiah debt burden and
Bank Indonesia's long track record of containing inflation to
single-digit levels," S&P said.

S&P said Indonesia's creditworthiness is constrained by
substantial infrastructure development needs, which, in the
context of low per capita income compared to similarly rated
sovereigns, will pressure government finances medium term.

It added that creditworthiness is also constrained by the risk
that the eventual political transition may slow, though not
derail, the ongoing microeconomic reform process and the uneven
trend toward improving transparency.

"President Soeharto is likely to be re-elected in 1998, but
his eventual exit from politics will test confidence and
challenge his successors to maintain support for economic policy
orthodoxy and further structural reform," S&P said.

"Indonesia's consenus-based political culture, the widely
shared benefits of economic development, and a technocratic
leadship augur well for economic policy stability during the
transition and beyond," the ratings agency said.

Public finances should strengthen as ongoing tax reforms
bolster non-oil revenues and would benefit too from additional
privatisation, it said.