Moody`s upgrades indonesia`s sovereign credit rating
Jakarta, (13/4) - Moody`s Investor Service (Moody`s) upgraded the Sovereign Credit Rating of the Republic of Indonesia to Baa2 from Baa3 and changed the outlook on the rating to stable from positive on April 13, 2018. Moody`s highlighted a credible and effective policy framework that was conducive to macroeconomic stability as the key factor in supporting the decision, according to a statement here on Friday. Coupled with a build-up of financial buffers, a prudent fiscal and monetary policy has improved Indonesia`s resilience and capacity to respond to shocks.
On the fiscal front, the government has maintained strict adherence to the 3.0 percent budget deficit cap since its institution in 2003, Acting Group Head of Bank Indonesia`s (BI`s) Communication Department Jumanto Herdiawan noted. Sustained low deficits have kept the debt burden low, combined with a long tenor of funding and reduced financing needs and risks. On the monetary policy front, BI has established a track record of prioritizing macroeconomic stability.
The central bank`s more flexible approach towards currency intervention and more effective policy coordination between BI and the central and regional governments have kept inflation stable at low levels. BI has also demonstrated greater willingness to use macroprudential tools in response to shocks. The strengthening of Indonesia`s external position and build-up of reserve buffers also enhances the country`s resilience to potential shocks.