Bank of Indonesia welcomes S&P affirmation of Indonesia's BBB sovereign rating with stable outlook

Bank of Indonesia published a statement after S&P Global Ratings affirmed the Republic of Indonesia's sovereign credit rating at BBB with a stable outlook, maintaining the country's investment-grade status. The rating action reflects S&P's view that recent weakening in Indonesia's fiscal and external indicators is temporary and should improve as government policy direction and implementation become more stable. S&P's stable outlook is based on expectations that government revenue will recover this year and export receipts will strengthen with improving commodity prices. It also pointed to policy measures to raise state revenue and improve natural resource exports over the medium term, alongside the government's commitment to keep the fiscal deficit below 3%. S&P indicated that an upgrade would require structural improvement in fiscal and external metrics, including a sustained reduction in the fiscal deficit, materially higher government revenue, lower financing costs, a stable exchange rate, lower external debt and reduced gross external financing needs. In response, Bank Indonesia said it will continue to strengthen its monetary, macroprudential and payment system policy mix while reinforcing coordination with the government and the Financial System Stability Committee. It linked that coordination to managing spillovers from global uncertainty, including the conflict in the Middle East, preserving macroeconomic stability and supporting financing for the government's Asta Cita priority programmes.