Wednesday, 17 July 2019 | 17:40 WIB

Indonesia Retains Investment Grade Rating from Fitch Ratings

Indonesia Retains Investment Grade Rating from Fitch Ratings (special)

JAKARTA, NETRALNEWS - Global debt rating agency Fitch has announced that Indonesia's debt rating remains in the BBB position with a stable outlook on March 14, 2019. Indonesia's debt rating by Fitch has been included in the investment grade category since 2011 and increased to BBB rating in December 2017.

In its report, Fitch stated that the Government's low level of debt burden and good economic growth were the driving factors for achieving the Indonesian rating. Indonesia's debt burden compared to peers is considered safer and the domestic financial sector is considered to be in a healthy condition. The growth of Indonesia's Gross Domestic Product (GDP) is considered to be far better than peers. Fitch believes that domestic demand and investment will continue to support Indonesia's economic growth performance.

Furthermore, Fitch stated, Indonesia has a positive potential of transferring investment objectives in line with global economic conditions and US monetary policy. Fitch believes that Indonesia's Sovereign Credit fundamentals will remain strong as the exchange rate movements stabilize and foreign exchange reserves remain stable.

The Indonesian government is considered to be implementing a good and appropriate fiscal policy so that Indonesia's fiscal is healthy, which is marked by a decrease in the APBN deficit from 2.51% in 2017 to 1.76% in 2018. The reduction in the APBN deficit is driven by improvements in tax revenues and increased quality of spending. Prudent fiscal policy is also indicated by Indonesia's low debt with a ratio of 29.8% to GDP in 2018. Furthermore, Fitch believes that the Government's debt ratio remains stable in the next few years and the state budget deficit is maintained at a low level.

Fitch's move to maintain Indonesia's debt rating in the BBB position with the stable outlook shows that Indonesia's economy remains stable amid the weakening global economy. Structural and fiscal reforms carried out by the Government together with stakeholders are an effort to maintain the stability of the Indonesian economy. The Fitch announcement reflects that the Indonesian economy is still believed to remain strong by the international community amid pressure from the weakening global economy. Appreciation from leading international institutions such as rating institutions on the performance of the Indonesian economy has an important role to play in creating a healthier, fairer and more independent state budget and improving the Indonesian economy in general.

The government continues to overcome challenges in order to encourage sustainable and equitable economic growth. The government has and will continue to take proactive steps to realize this through the management of the state budget and credible and effective fiscal policy. Furthermore, the role of various parties and the wider community is also very important in realizing a more inclusive economy in the future.

Fitch has been established since 1913 and has 50 branches in the world. Fitch has a strong representation in assessing the debt ratings of Emerging Markets countries in Asia, Latin America, Eastern and Central Europe, Africa and the Middle East. Fitch is a credible debt rating agency and has become the main reference for investors in investing.