Fitch affirms Indonesia’s rating

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Indonesia ratingFitch has affirmed the sovereign credit rating of the Republic of Indonesia at BBB-/stable outlook.

In a press release on November 15, the ratings agency  explained that the key factors supporting its affirmation of Indonesia’s sovereign credit rating are: (1) proper policy adjusment during recent market presure (2) relatively high economic growth supports the credit profile as long growth continues to be sustainable, (3) low public debt and prudent fiscal management and (4) well-capitalised banking system.

The Governor of Bank Indonesia, Agus D.W. Martowardojo, said that “The rating affirmation by Fitch provides renewed recognition of Indonesia’s economic stability with the highest growth outlook amid the deteriorating condition of the global economy. This is the result of the unswerving commitment of the authorities in keeping stability as the priority. The strength of macroeconomic fundamentals as noted by Fitch Ratings will be a strong asset for passing through times of uncertainty and moving on to even greater achievements.”

Fitch said although Indonesia’s fiscal deficit is likely to widen to 2.5 per cent of GDP in 2013 from 1.9 per cnet in 2012, a fiscal rule commits the Indonesian government to restraint and ensures that public finances continue to be strong. At some 25 per cent of GDP, public debt remains low compared to the median of 39 per cent for sovereigns rated in the ‘BBB’ range.

The agency added that Indonesia’s banking system is well capitalised. While Fitch’s macro-prudential indicator points to relatively high risk (MPI 3) because of strong credit growth, there are no signs of strain for the system as a whole. Stress tests performed by Fitch show that the major banks are sufficiently resilient to withstand some worsening of domestic operating conditions and increased pressure on the rupiah. Fitch notes that Indonesia is introducing a new regulatory authority at a time when growth is slowing and there is potential of renewed external market pressures.

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Reading Time: 2 minutes

Fitch has affirmed the sovereign credit rating of the Republic of Indonesia at BBB-/stable outlook.

Reading Time: 2 minutes

Indonesia ratingFitch has affirmed the sovereign credit rating of the Republic of Indonesia at BBB-/stable outlook.

In a press release on November 15, the ratings agency  explained that the key factors supporting its affirmation of Indonesia’s sovereign credit rating are: (1) proper policy adjusment during recent market presure (2) relatively high economic growth supports the credit profile as long growth continues to be sustainable, (3) low public debt and prudent fiscal management and (4) well-capitalised banking system.

The Governor of Bank Indonesia, Agus D.W. Martowardojo, said that “The rating affirmation by Fitch provides renewed recognition of Indonesia’s economic stability with the highest growth outlook amid the deteriorating condition of the global economy. This is the result of the unswerving commitment of the authorities in keeping stability as the priority. The strength of macroeconomic fundamentals as noted by Fitch Ratings will be a strong asset for passing through times of uncertainty and moving on to even greater achievements.”

Fitch said although Indonesia’s fiscal deficit is likely to widen to 2.5 per cent of GDP in 2013 from 1.9 per cnet in 2012, a fiscal rule commits the Indonesian government to restraint and ensures that public finances continue to be strong. At some 25 per cent of GDP, public debt remains low compared to the median of 39 per cent for sovereigns rated in the ‘BBB’ range.

The agency added that Indonesia’s banking system is well capitalised. While Fitch’s macro-prudential indicator points to relatively high risk (MPI 3) because of strong credit growth, there are no signs of strain for the system as a whole. Stress tests performed by Fitch show that the major banks are sufficiently resilient to withstand some worsening of domestic operating conditions and increased pressure on the rupiah. Fitch notes that Indonesia is introducing a new regulatory authority at a time when growth is slowing and there is potential of renewed external market pressures.

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