Delighted By Two Global Debt Rating Agencies Indonesia's Value Is Investment Worth, BI Boss: Shows High Policy Credibility

JAKARTA – Bank Indonesia (BI) has affirmed Indonesia's rating at BBB+ (investment grade) with a stable outlook released by the rating agency Rating and Investment Information, Inc. (R&I) indicates maintained macroeconomic stability and Indonesia's medium-term prospects.

BI Governor Perry Warjiyo said this was good news amidst global economic uncertainty with the risk of stagflation and increasing protectionism policies by various countries.

"This shows that we have high policy credibility and a strong synergy in the policy mix between Bank Indonesia and the government," he said in an official statement quoted on Tuesday, July 5.

According to Perry, his party will continue to monitor global and domestic economic and financial developments, formulate and implement the necessary steps to ensure macroeconomic stability and financial stability.

"This includes further adjustments to the policy stance if necessary, as well as continuing to strengthen synergies with the government to accelerate national economic recovery," he said.

For information, R&I estimates that the Indonesian economy will grow strongly in 2022 and support the government's growth target in the range of 4.8 percent to 5.5 percent.

Perry explained that the government had taken strategic steps to reduce the impact of rising global commodity prices on inflation by increasing the allocation of subsidies and social spending (shock absorbers).

Furthermore, the growing state revenue sector is very useful for reducing this year's fiscal deficit to 3.9 percent of GDP, down from 4.6 percent in 2021. Meanwhile, the government debt ratio was recorded at 40.7 percent of GDP at the end of the year. last year was claimed to be still lower than peer countries.

"On the external side, the current account balance recorded a surplus supported by improved terms of trade in line with rising commodity prices, and again recorded a surplus in the first quarter of 2022. The current account is expected to return to a deficit in 2022 at a controlled range, thus supporting Indonesia's external resilience," he clear.

Meanwhile, foreign exchange reserves at the end of May 2022 were recorded at 135.6 billion US dollars and were considered far above the global minimum standard.

Previously, VOI noted that another international rating agency, Fitch Ratings, noted that Indonesia's medium-term economic growth prospects were considered good and the government debt-to-GDP ratio was low (investment grade with a stable outlook).

"Bank Indonesia will continue to strengthen the policy mix with the government to ensure macroeconomic stability and financial stability are maintained," Governor Perry said late last month.