Moody's upgrades Indonesian sovereign rating after Fitch assessment
Xinhua,April 13, 2018 Adjust font size:
JAKARTA, April 13 (Xinhua) -- Indonesia got a sovereign rating upgrade from Moody's Investors Service on Friday, months after winning better assessment from Fitch Rating as the country's resilience and capacity to respond to external shock strengthened.
Moody's increased the government of Indonesia's long-term issuer and senior unsecured rating to Baa2 from Baa3 with stable outlook changed from positive, Moody's said in a statement.
The rating agency said the upgrade is underpinned by an increasingly credible and effective policy framework conducive to macroeconomics stability.
"Together with a build-up in financial buffers, prudent fiscal and monetary policy strengthen Moody's confidence that the sovereign resilience and capacity to respond to shocks has improved," it said.
The Moody's new policy has brought the agency in line with the Fitch assessment, grouping Indonesia on par with the Philippines and India.
Moody's expects the government fiscal and monetary policy around preserving macroeconomic stability and setting up financial buffers that has become increasingly apparent in recent years will persist.
On fiscal front, Moody's said the government has kept strict adherence to the 3.0 percent budget deficit cap since 2003.
Southeast Asia's biggest economy is expected to expand 5.4 percent this year, up from 5.07 percent last year.
The Indonesian central bank had cut 2 percentage points in its benchmark interest rate to 4.25 percent from the beginning of 2016 until August 2017 to help spur economic growth. The lender has maintained a neutral policy since September last year and admitted to conduct intervention to the financial market in recent months to restrict rupiah volatility.
The world bank said on Thursday that the Indonesian central bank still has opportunity to maintain a neutral policy as the international lender forecasts there will be no huge amount of outflows of capitals from the country amid the normalization program in advanced nations. Enditem