ASEAN KEY DESTINATIONS
Indonesia Debt Rating Raised
Indonesia’s credit rating was raised to the highest level in 13 years by Standard and Poor’s, which cited the Southeast Asian nation’s “resilient” economy and improving finances.
The long-term foreign-currency rating was increased one level to BB+ from BB, with a positive outlook, the company said in a statement today. The rating, which was last increased in March 2010, is now one level below investment grade.
“The rating upgrade reflects continuing improvements in the government’s balance sheet and external liquidity, against a backdrop of a resilient economic performance and cautious fiscal management,” said Standard and Poor’s credit analyst Agost Benard.
“Rating constraints include Indonesia’s low per-capita income, structural and institutional impediments to higher economic growth, and relatively high inflation.”
Rising consumer spending is driving growth in the world’s fourth-most populous nation, increasing pressure on policy makers to restrain price gains and protect purchasing power. Indonesia’s economy grew at the fastest pace in six years in the final quarter of 2010, and the central bank has increased its benchmark interest rate from a record low to curb inflation.
The nation also remains vulnerable to external shocks because of its shallow domestic capital markets, while the risk has lessened, Benard said.
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