Indonesia was confirmed as the best placed south Asian economy in the wake of the global recession with another ratings agency upgrade to its credit standing on Friday.
Standard & Poor’s raised Indonesia’s credit rating on Friday as the country’s central bank boosted 2010 growth forecasts for a second time this year.
S&P lifted its long-term foreign currency sovereign credit rating to BB from‘ BB-, bringing Jakarta up from level with the Philippines to on a par with Turkey.
It was more good news for the country in a week when the President, Susilo Bambang Yudhoyono had successful state visit to Australia when he became only the fifth foreign politician to address a joint session of both houses of the Australian parliament.
The final upgrade from the world’s three major ratings groups confirmed that Indonesia missed being mauled by the global recession that took its toll in other emerging and developed economies.
Economic growth last year topped 4% and the central bank last week boosted its 2010 growth forecast for a second time this year to the range of 6%-6.5%.
It is the first upgrade of Indonesia in four years and took the rating to its highest level since 1998.
For Australian companies doing business, its good news, especially for banks like the ANZ and Commonwealth, which have growing interests in the Indonesian financial sector.
Other major ratings group, Fitch and Moody’s, have also upgraded Indonesia in recent months.
Indonesia’s economy and currency were among the best performing in the world in 2009. The Jakarta stock index jumped 87%, while the rupiah rose more than 15%.
Sri Mulyani Indrawati, Indonesia’s finance minister and the chief architect of recent financial reforms, was quoted by newsagencies last week as sating she hoped the country would earn an investment grade rating from Moody’s within a year, which would require a move up of one more notch.
S&P’s move was a sign of confidence as reformers face political attacks by opponents over the $715m bail out of the small lender, Bank Century, which has sparked infighting within the Government and police.
S&P said it thought “the political pressures experienced by the administration will prove to be only a temporary distraction from implementing its fiscal, administrative, and structural reform agenda”.
S&P also affirmed its BB+ long-term local currency rating and B short-term foreign and local currency rating.
