Moody’s Upgraded Outlook Shows International Recognition of Indonesia’s Economy: Finance Minister

Indonesia’s debt outlook rating

Minister of Finance Sri Mulyani welcomed Indonesia’s debt rating outlook raised by Moody’s Investors Service. “It indicates international recognition, appreciation, and optimism of Indonesia’s economic performance amidst domestic and global challenges,” Sri Mulyani said in a press release on Friday (10/2).

Sri Mulyani further said that the upgraded outlook assured the Ministry of Finance to continue Fiscal Reform. “Stronger synergy among the economic agents are expected to be able to be maintained and able to increase Indonesia’s debt ratings in the upcoming years,” the Minister said.

According to Sri Mulyani, Moody’s upgraded outlook shows international recognition of Indonesia’s economy amidst global uncertainty. “Appreciation from an international agency, namely, Moody’s, on Indonesia’s economic performance plays an important role in manifesting a healthier State Budget (APBN), along with its role to the improvement of Indonesia’s economy in general.

However, Sri Mulyani added that the Government also realizes that there are issues that need to be addressed in order to boost a sustainable and just economic growth.

“The Government has done and always takes proactive measures through credible and effective management of the State Budget and fiscal policies,” Sri Mulyani said adding that the Government cannot do it all alone, it needs supports from all stakeholders and Indonesians instead.

For the record, Moody’s, on 8 February 2017, has upgraded Indonesia’s debt rating oulook to “positive” from “stable”. In the meantime, on debt securities issuance, the Agency reaffirmed its Baa3 ratings to Indonesia.

In its official statement, Moody’s stated that the main factors behind Indonesia’s upgraded ratings are, among others, a decline in Indonesia’s vulnerability to external shocks which is expected to continue; a narrower current account deficit; higher foreign exchange reserves; and a slower rise in private sector external debt.

Moody’s also acknowledged Indonesia’s improving macroeconomic stability and fiscal discipline, together with its measured and sustainable regulations. It shows an improvement in  policy effectiveness.

Moody’s specifically mentioned that Indonesian Government has demonstrated strong fiscal discipline amidst a significant drop in oil and gas prices. It is because Indonesia has implemented several policies, including tax amnesty policy, state budget cut, and administrative reform which improves budget’s quality.

Moreover, Indonesian Government is also considered to be able to maintain 3 percent deficit ratio of GDP. Moody’s also underlined Indonesia’s success in carrying out structural reforms on the economy, fiscal, as well as measured and consistent regulations. (Biro KLI Kemenkeu/EN) (RAS/MMB/YM/Naster)