By THE JAKARTA POST
ASIA NEWS NETWORK
The rating was increased to BBB from BBB- and put on a stable outlook, S&P said in a statement on Friday. The long-term rating may be raised again if Indonesia’s external settings improve materially from their current levels, or if its fiscal settings improve over the next two years, it said.
“We raised the ratings to reflect Indonesia’s strong economic growth prospects and supportive policy dynamics, which we expect to remain following the re-election of President Joko Widodo recently,” S&P said. “The sovereign ratings on Indonesia continue to be supported by the government’s relatively low debt and its moderate fiscal performance.”
The rating upgrade will be a shot in the arm for Widodo, who’s pledged to bolster growth and expand an ambitious infrastructure drive that’s estimated to cost more than US$400 billion in his second term. It puts Indonesia at the same level as Hungary and Uruguay, but a notch below the Philippines, which won an upgrade from S&P last month.
“The upgrade validates our view that Indonesia’s fundamentals are sound and reform prospects remain good after the elections,” said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore.