Monday, December 19, 2011

Let's Invest in Indonesia, Fitch Raised Investment Grade of Indonesia

Fitch, one of the world rating agency, on Thursday ( Dec 15 /2011), raised Indonesia's debt rating from BB + to BBB- as an investment rated.

The increase in this ranking makes investment in Indonesia is reduced risk and the lure foreign investors into the Indonesian market. Although quite surprising because previously expected to be given in 2012, investors are factoring the possibility of considering the development of Indonesia's solid macroeconomic performance.

Earlier, on February 24, 2011, Fitch Indonesia raised its outlook from stable to positive. Remain high economic growth at 6.5 percent with the inflation rate is low (less than 4 percent), a stable exchange rate, coupled with budget deficits and low levels of debt GDP ratio is healthy.

Fitch projected growth in gross domestic product (GDP) averaging more than 6.0 percent per year over the forecast period through 2013, amid a global economic conditions are less conducive.

Indonesia domestic-oriented economy and the success of creating a relatively strong economic growth without causing external imbalances, or reliance on short-term external financing shows that the economic growth prospects will be resilient to external shocks, as happened in 2008.

Public debt is low and positive real interest rates provide the authority flexibility policy to respond of the slowdown. Higher levels of trust on macro policy framework is the key to increase this ranking. Tolerance of nominal currency gains within the framework of monetary policy, and a willingness to tighten policy if inflation reached a high single digit, and fiscal policies carefully strengthening the basis for the rise in the rankings.

Higher levels of trust on macro policy framework is the key to increase this ranking. Tolerance of nominal currency gains within the framework of monetary policy, and a willingness to tighten policy if inflation reached a high single digit, and fiscal policies carefully strengthening the basis for the rise in the rankings.

Fitch believes credit profile has a new rank at the level of tolerance. The ratio of gross government debt to GDP is expected to drop from 26 percent at the end of 2010 to 25 percent by the end of 2011, far below the median of the BBB, which is 36 percent. Moreover, the ratio of debt to revenue is projected to fall from 163 percent at the end of 2010 to close to the median projection BBB of 126 percent in 2012, despite the existence of structural fiscal weaknesses in the form of low incomes, only 17 percent of GDP compared to 33 percent of the median BBB.

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