JCR raises Indonesian credit rating to BBB+. Japan Credit Rating Agency Ltd. (JCR) has raised Indonesia`s sovereign debt rating from BBB- with a positive outlook to BBB+ with a stable outlook.
A statement on the JCR website says that, since President Joko “Jokowi” Widodo took office in October 2014, Indonesia has been pressing ahead with structural reforms aimed at promoting sustainable growth by reducing dependence on the natural resources sector.
The effects of reform initiatives, according to JCR, include an improved investment climate, an acceleration of infrastructure development and the control of external debt owed by the private sector, as a result of Bank Indonesia regulations on external borrowing.
“Taking those into consideration, JCR has upgraded its ratings by one notch and changed the outlook to stable,” said the rating firm.
The so-called economic policy packages and a BI reference rate cut had boosted private investment, especially in the non-commodities sector, JCR asserted, adding that the decline in the current account deficit and high foreign exchange reserves also reflected increasing resilience of Indonesia`s economy.
JCR also said fiscal reform in the form of shifting subsidy spending to infrastructure, health and education had helped reduce the fiscal deficit and increase spending efficiency.
Bank Indonesia Governor Agus Martowardojo said JCR`s decision to raise Indonesia’s credit rating reflected international institutions` confidence in the structural reforms.
“It also reflects harmonious synergy between Bank Indonesia and the government in safeguarding macroeconomic financial system stability,” he said. JCR Raises Indonesian Credit Rating to BBB+ (bbn, The Jakarta Post)