REPUBLIKA.CO.ID, JAKARTA – International rating agency Standard and Poor’s (S&P) assesses Indonesia’s sovereign debt is at BB+ for long term and B for short term with positive outlook. Positive outlook reflects the upgrade possibility if economic growth keeps increasing, financial market deepening, and regulation imposition is measurable.

The S&P Executive Analyst for Indonesia, Agost Bernard, said several factors supported Indonesian rating, which were the low deficit of government’s budget, the decreasing of debt burden in public sector, the improved external liquidity, and resilient economic performance.

Yet, S&P emphasizes the obstacles that Indonesia faces to reach investment grade. “Low per capita income, structural and institutional impediments, foreign debt in private sector, and also shallow domestic capital markets,” he said.

S&P said uncertain policy happened due to suspension on planned electricity tariff increasing and inability to cut subsidy for fuel amid plan to increase the fuel price. “Also several proposed policies in industry and trade,” he said.

Meanwhile, Bank Indonesia (BI) Governor, Darmin Nasution, disagree. He argued, the performance of Indonesia’s balance of payments had been in healthy position with relatively controlled deficit and the increasing of foreign investment.

The ratio of total external debt toward gross domestic product tends to decent and in 26.5 percent at the end of 2011. The central bank sees foreign debt in private sector as harmless as 36 percent of it comes from the main company and its affiliation.

Nasution admitted that several structure problems needed to solved, along with market optimism about economic outlook of Indonesia. BI and government will take several steps to mitigate the potential risk from internal and external sectors. “BI will maintain the policy that in line with macro economy projection to reach high economic growth,” he added. 

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