Indonesia is getting closer to obtaining an investment grade rating, its first since the Asian financial crisis more than a decade ago, after Fitch Ratings raised its outlook to positive from stable.
Asia-Pacific Sovereign Ratings Fitch Senior Director and Head, Andrew Colquhoun, said “The positive outlook reflects Fitch’s view that Indonesia’s favorable macroeconomic prospects are likely to see the credit profile strengthen further over the next 12 to 18 months, despite near-term risks from inflation and potentially volatile capital flows."
In addition, the ratings agency views that Indonesia's balance of payment has been sound since 1998. In fact, foreign exchange reserves recorded US$96.2 trillion, which was equal to seven months of imports and debt repayment.
According to Bank Indonesia Governor Darmin Nasution, the decision to improve the outlook reflects the international confidence toward Indonesia's economy amidst near-term inflation rate which poses risk over the nation.
"Indonesia only requires a small step toward investment grade," said Darmin on February 24.
Earlier, Moody’s Investors Service last month raised Indonesia’s credit rating to the highest level since the 1997 Asian financial crisis, citing the nation’s “economic resilience” and improving public debt position. Moody’s Ba1 rating is also one step below investment grade.
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