Moody’s: Indonesia’s Sovereign Credit Rating is Stable

International rating agency Moody’s Investor Service has affirmed Indonesia’s sovereign credit rating at Baa2/stable outlook (Investment Grade) on 10 February 2020.

Governor of Bank Indonesia (BI) Perry Warjiyo said that the statement confirmes the optimism of international stakeholders on Indonesia’s economy prospect amid global and domestic challenges.

“The positive economic outlook is the result of the synergy of policy mix between Bank Indonesia and the Government in maintaining macroeconomic stability and driving the momentum of economic growth,” Perry said.

According to the Governor, the BI will pay close attention to global and domestic economic development in utilizing accommodative policy mix to maintain inflation and external stability as well as to support the momentum of economic growth.

In its press release, Moody’s stated key factors that supported the decision, such as, the country’s strong and stable economic growth as well as the Government’s low debt burden which maintained through consistent fiscal discipline and macroeconomic stability.

Furthermore, Moody’s also mentioned a number of challenges that currently faced by the Indonesian Government, including low revenue, dependence on external funding, and vulnerability of the economic structure to the commodity cycle.

The press release predicts that Indonesia’s economy will be supported by the country’s GDP that reaches more than US$ 1 trillion and its population that reaches more than 260 million people. The rating agency also noted that the country’s economic reforms have focused more on infrastructure development—especially transportation connectivity—and deregulation of policies to boost investment.

Despite being in a phase of lower economic growth, Indonesia’s economic performance is able to continue to surpass most of the countries in Baa ranking.

In terms of fiscal note, Indonesia is considered capable in maintain the Government’s debt burden low and the current account deficit at moderate level by emphasizing on macroeconomic stability. Moody’s predicts that the Government debt will remain stable at around 30 percent of the GDP in the short and medium-term.

Moreover, Moody’s predicts that Indonesia’s current account will remain at moderate level compared to other Baa-ranked countries. (Departemen Komunikasi BI/EN)

Translated by: Galuh Wicaksono
Reviewed by: Mia Medyana