BI Welcomes Fitch's Affirmation on Indonesia's Rating

Jakarta: Bank Indonesia (BI) Governor Perry Warjiyo has said that Fitch's affirmation on Indonesia's rating at BBB/stable outlook reflects the acknowledgement of international stakeholder on Indonesia's maintained macroeconomic stability and economic prospects in the medium-term amid the covid-19 pandemic. 
 
"This supported by the credibility of the policies and strong policy coordination both nationally and among the Financial System Stability Committee members: Bank Indonesia, Ministry of Finance, Financial Services Authority, and Deposit Insurance Institution," said the BI Governor in a press release on Monday.
 
"Going forward, Bank Indonesia will continue to closely monitor global and domestic economic developments, take the necessary policy measures to ensure macroeconomic and financial system stability and continue the synergy with the Government to accelerate the national economic recovery," he added.

Last week, Fitch Ratings (Fitch) affirmed Indonesia's Sovereign Credit Rating at BBB with a stable outlook.
 
According to Fitch, key factors that support the affirmation are a favorable medium-term growth outlook and a low, but rising, government debt/GDP ratio. 
 
On the other hand, Fitch underscores challenges including a high dependence on external financing, low government revenue, and lagging structural features such as governance indicators and GDP per capita compared with 'BBB' category peers.
 
In its assessment, Fitch forecasts Indonesia's GDP growth to gradually recover to 5.3% in 2021 and 6% in 2022, from a contraction of 2.1% in 2020 induced by the Covid-19 pandemic. 
 
The recovery is being supported by government stimulus spending and net exports, including from improved commodity prices. 
 
In addition, the growth momentum will also be supported by infrastructure spending. 
 
The recovery will depend on handling the spread of COVID-19, especially through vaccinations acceleration. 
 
Over the medium term, Fitch projects growth to receive a boost from implementation of the Omnibus Law on Job Creation which aims to alleviate several long-standing barriers to investment. 
 
Fitch also take notes on the establishment of the Indonesia Investment Authority, which is intended to help finance infrastructure development over the next few years

 
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