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View all search resultsFuel price hike in line with policy assumption: Fitch
Rating agency Fitch says recent Indonesian policies, including the subsidized-fuel hike, are a move toward cooling the economy and achieving sustainable growth
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R
ating agency Fitch says recent Indonesian policies, including the subsidized-fuel hike, are a move toward cooling the economy and achieving sustainable growth.
'Our assumption that the authorities would manage policy along broadly appropriate lines is one of the factors that supported Indonesia's upgrade to 'BBB-' in December 2011,' Fitch said in a press statement on Tuesday.
'This assumption remains an important element in our credit assessment. Indonesia's sovereign credit profile has benefited from stronger and less volatile economic growth than its 'BBB' range peers,' the rating agency added.
Fitch stressed that delivering a macroeconomic policy mix that delivers sustainable growth was important. Inflation and current account deficit developments suggest that growth might stand at about 5.5 percent to six percent, according to Fitch.
Fitch also acknowledged Bank Indonesia's recent policy to raise its benchmark interest rate by 25 basis points to six percent as an attempt to address potential economic overheat, driven by loose monetary policy and credit conditions.
Indonesia's foreign reserves fell by 6.8 percent to US$105.1 billion between the end of 2012 and May 2013.
Fitch said pressure on Indonesia's currency and financial markets demonstrated the vulnerabilities that could arise when market confidence in the policy framework is shaken.
