Received BBB+ Debt Rating From Japan Credit Rating Agency, BI: Indonesia's Economy Is Strong And Maintained

JAKARTA - Bank Indonesia (BI) said the debt rating agency Japan Credit Rating Agency, Ltd. (JCR) once again maintained the Sovereign Credit Rating of the Republic of Indonesia at BBB+ (Investment Grade) with a stable outlook on July 27, 2022.

BI Governor Perry Warjiyo said this was based on the prospect of Indonesia's strong economic growth in line with improving domestic demand, controlled government debt, and external resilience supported by the accumulation of foreign exchange reserves.

"JCR estimates that government debt will decrease gradually as the fiscal posture improves, supported by increased revenues in line with improved economic growth and rising commodity prices," he said in a press statement quoted on Thursday, July 28.

According to Perry, the affirmation of Indonesia's rating at BBB+ rating with a stable outlook shows that international stakeholders still have strong confidence in maintaining macroeconomic stability and Indonesia's medium-term economic prospects.

"Going forward, Bank Indonesia will continue to monitor global and domestic economic and financial developments, formulate and implement the necessary measures to ensure macroeconomic and financial stability, including further adjustments to the policy stance if necessary," he said.

He also ensured that the central bank will continue to carry out a close policy mix with the government in order to accelerate the national economic recovery.

For information, JCR views Indonesia's economic recovery momentum will continue. The Indonesian economy is expected to grow beyond 5 percent by 2022, mainly supported by private consumption, investment, and exports, driven by rising commodity prices.

From the fiscal side, in April 2022, the government has raised VAT as part of efforts to increase revenues and improve fiscal posture.

This policy is expected to support the achievement of commitments to reduce the fiscal deficit to below 3 percent of GDP in 2023. In addition, the increase in government revenues is also driven by economic expansion and rising commodity prices.

From the external side, JCR estimates that the current account surplus will continue in 2022, supported by rising commodity prices in the short term.

Looking ahead, direct investment inflows are expected to continue, driven by an improvement in the investment climate. The resilience of the Indonesian economy to external pressures also remains strong, supported by foreign exchange reserves equivalent to 6.6 months of imports

JCR previously maintained the Sovereign Credit Rating of the Republic of Indonesia at BBB+ with a stable outlook (two levels above the lowest level of Investment Grade) on December 22, 2020.