Fitch raises Indonesia’s rating to investment grade

Ratings agency Fitch on Thursday lifted Indonesia‘s sovereign debt rating from BB+ to BBB-, as Southeast Asia‘s largest economy shows signs of “strong and resilient economic growth”.
The country regained investment grade rating after a period of 14 years.
“The upgrades reflect the country’s strong and resilient economic growth, low and declining public debt ratios… and a prudent overall macro policy framework,” said Philip McNicholas, director of the agency’s Asia-Pacific Sovereign Ratings group.
Indonesia’s gross domestic product is expected to grow at more than six percent a year until 2013, driven by strong domestic demand and lower reliance on short-term external financing.
It also said favourable interest rates would give the authorities greater flexibility in responding to the global economic slowdown.
Indonesia lost the investment grade rating in December 1997, during the Asian financial crisis.
Economists said the ratings upgrade could attract greater foreign investment into Indonesia.
“It is definitely good news for Indonesia. I am sure this will be followed by other rating agencies. When that happens, there will be more foreign capital flooding Indonesia, such as mutual funds,” Standard Chartered’s senior economist in Jakarta, Fauzi Ichsan, told AFP.

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