RI NOW ONLY ONE NOTCH FROM INVESTMENT GRADE : BI

Jakarta, Jan 25 (ANTARA) - Bank Indonesia (BI or central bank) said Monday Indonesia was only one notch away from an investment grade after global rating agency Fitch had upgraded the country's credit rating to BB+ earlier in the day.

"Given the upgraded rating, we only need to go up one more notch to reach an investment grade," Bank Indonesia (BI) Deputy Governor Hartadi A Sarwono said in a short text message to journalists.

Among the positive factors pushing up Indonesia's rating was the Indonesian economy's resilience amid external upheavals, he said.

The other factor was Indonesia's balance of payments which had tended to continuously record a surplus in terms of current account and capital account, he said.

Hartadi said Indonesia's foreign exchange reserves had continued to increase and now totaled nearly US$70 billion, up from US$69 billion at the end of last year.

Indonesia's state budget deficit was still sound compared to those of other countries belonging to the same group and this was another factor considered to upgrade its credit rating, he said.

If Indonesia continued to manage its macro economy consistently and carefully, its economic prospects would become even better, he said.

Fitch upgraded Indonesia's credit rating to BB+ on Monday, one notch below the investment grade. The rating's outlook is stable.
The upgraded rating is for Indonesia's long-term debts. Fitch also upgraded the rating of Indonesia's country ceiling from BB+ to BBB and maintained the rating of its short-term debt at B.
Ai Ling, a director in Fitch's Sovereign Ratings team, said in a statement the rating reflected Indonesia's relative resilience to the 2008-2009 severe global financial stress test, underpinned by continued improvements in the country's public finances, a fundamental sovereign rating strength, and a material easing of external financing constraints.

Fitch also noted that Indonesia's public debt ratio continued to fall to only 30 percent of gross domestic product (GDP) in 2009. Foreign exchange reserves, including gold also rose by 28 percent to US$66 billion and economic growth increased to 4.6 percent last year.

But Fitch added the priority risk of long-term development would overshadow the performance if inefficient fiscal spending remained unsolved in line with deferred increase in electricity tariffs and fuel oil prices.