JAKARTA (TheInsiderStories) – Japanese-based Rating and Investment Information, Inc. (R & I) has raised the Sovereign Credit Rating (SCR) of the Republic of Indonesia from ‘BBB-‘ with Positive Outlook to ‘BBB’ with Outlook Stable on Wednesday (7/3).
In an official statement, R & I stated that the key factor supporting the increase of SCR is the progress of Indonesian economy, which continues to show excellent performance with low and stable inflation, well-maintained fiscal deficits, and low government debt ratio.
Indonesia’s economic resilience is also claimed to be better in facing external turbulence, reflected in the current low current account deficit and large foreign exchange reserves.
In addition, infrastructure development shows progress and the investment climate is improving. R & I also noted that the Government’s efforts in increasing tax revenues, among others, through the strengthening of tax database, which is considered quite good.
Furthermore, R & I believes that policies focusing on macroeconomic stability and a series of structural reform initiatives will continue in the midst of various political agendas, namely regional elections 2018 and legislative and presidential elections in 2019.
R & I considers that the trend of economic growth is expected to continue, inflation will be in the range of 3-4 per cent supported by prudent monetary policy, financial system stability will be maintained, the current account deficit will widen slightly in the range of 2 per cent, and the fiscal deficit will be below a 3 per cent limit to GDP.
The Governor of Bank Indonesia, Agus D.W. Martowardojo, stated this rating upgrade reaffirms international acknowledgment on Indonesia’s increasingly strong economic fundamental.
The recognition is supported by the effectiveness of Government policies and authorities in maintaining macroeconomic stability and financial system, as well as the Government’s commitment to implementing structural reforms.
These positive moments need to be maintained together to ensure the stability of the economy so as to support the achievement of Indonesia’s stronger, sustainable, and inclusive economic growth.
He assures the bank will continue to optimize the policy mix including taking measures to stabilize the exchange rate to match its fundamental value and efforts to deepen financial markets to maintain economic stability.