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RI debt ranking improves due to fiscal reform
Thanks to successful reforms and fiscal management, the rating agency Standard & Poorâs (S&P) raised Indonesia's outlook from stable to positive
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hanks to successful reforms and fiscal management, the rating agency Standard & Poor's (S&P) raised Indonesia's outlook from stable to positive.
'The main reason for the improvement is due to fiscal reforms, especially reallocating fuel subsidies to infrastructure and state capital injections,' said CIMB Niaga economist Winang Budoyo, as quoted by Antara in Jakarta on Wednesday.
The analyst further said the budget structure improvement led to the improvement of Indonesia's current account deficit. This caused the country to be different from Russia, South Africa and Turkey, which suffered declines in their outlook ratings.
Winang said Indonesia's economic improvements -- resulting from the performance of President Joko 'Jokowi' Widodo's economic team -- were appreciated by S&P.
'Definitely this is the result of the work of all the ministries under the President, and just by chance, the portion of work from the Finance Ministry in fiscal-related matters, is quite big,' he said.
Winang said whether or not S&P increases Indonesia's debt ranking to investment grade within the next 12 months would depend on the hard work of Jokowi's economic team.
'[...] This will definitely depend on the President's capability as the leader of the 'orchestra'. We need consistent fiscal policy and better communication processes,' he said.
Winang said he hoped that the government could increase productivity especially in carrying out infrastructure development, which was useful in pushing growth so that the outlook rating could improve further.
University of Indonesia economist Telisa Aulia Falianty said Indonesia's improved debt outlook rank reflected the country's good macroeconomic stability management and its seeming ability to avoid the potential for an economic crisis. (ebf)
