JCR Holds Indonesia's Debt Rating On BBB+, This Is BI Boss's Response

Bank Indonesia (Photo: Antara)

JAKARTA - The Japanese Credit Rating Agency, Ltd. (JCR) again maintains the Sovereign Credit Rating of the Republic of Indonesia at BBB+ (Investment Grade) with a stable outlook. This decision considers the prospect of strong economic growth and controlled government debt.

Meanwhile, JCR estimates that government debt will decline gradually in line with improving economic growth and the government's fiscal deficit.

Responding to the JCR decision, the Governor of Bank Indonesia, Perry Warjiyo stated that Indonesia's rating affirmation at the BBB+ rating with a stable outlook shows that in the midst of the current global economic uncertainty, international stakeholders still have a strong confidence in maintaining macroeconomic stability and Indonesia's financial system.

"This is supported by the credibility of policies and the synergy of the strong policy mix between Bank Indonesia and the Government," he explained in his statement, Tuesday, March 26, 2024.

In the future, Perry said that Bank Indonesia will continue to pay close attention to developments in the global and domestic economy and finance, formulating and implementing the necessary steps to ensure macroeconomic and financial system stability is maintained.

Perry added that including further adjustment to policy stance when needed, and continuing to strengthen synergy with the Government to accelerate national economic recovery.

Meanwhile, JCR assesses that Indonesia's economic performance remains strong. Where Indonesia's economic growth in 2024 is estimated to reach 5 percent, supported by private consumption and investment.

In addition, JCR assesses that the implementation of the Job Creation Law is seen as capable of increasing foreign investment (PMA), among others, for infrastructure development and the capital city of the archipelago.

From the fiscal side, the credibility of fiscal policy is maintained as reflected in the fiscal deficit which is again below 3 percent of GDP in 2022, which is supported by the implementation of tax reform and reallocation of government spending.

Furthermore, in 2023, the fiscal deficit will drop to 1.66 percent (temporary figure) and will be maintained below 3 percent for 2024.

From an external perspective, JCR views that Indonesia's economic resilience to external turmoil is maintained, supported by a foreign exchange reserve level equivalent to 6.5 months of imports.

PMA continues to increase, supported by improving the investment climate, as well as running transaction performance in the face of the challenges of decreasing commodity prices.

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 July 27, 2022.