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Jakarta Post

Indonesia disappointed over S&P’s “uncertain” rating assesment

Anton Hermansyah (The Jakarta Post)
Jakarta
Fri, October 28, 2016

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Indonesia disappointed over S&P’s “uncertain” rating assesment Bank Indonesia Governor Agus Martowardojo speaks to journalists on the sidelines of the Indonesia Sharia Economic Festival in Surabaya on Oct. 28. (JP/Anton Hermansyah)

T

he government and central bank have expressed disappointment over Standard & Poor's (S&P) uncertain stance, making it less likely to grant Indonesia an investment grade rating in the near soon, ducking behind "additional concerns" on bad debts.

Bank Indonesia Governor Agus Martowardojo insisted Indonesian banking had kept non-performing loans (NPLs) far below the 5 percent level, despite a slight increase to 3.22 percent in August from 3.18 percent in July.

"S&P is not supposed to set a 'moving target' for Indonesia. That is not objective. We will clarify when we meet them," he said during the Indonesia Sharia Economic Festival (ISEF) in Surabaya on Friday, adding that banks had also built up capital to anticipate the bad loans.

In an interview with Bloomberg on Tuesday, S&P director of sovereign ratings Kyran Curry said Indonesia’s rising bad debts might hinder it from upgrading Indonesia’s rating. The global rating agency on June awarded Indonesia a BB+ rating, one notch below investment grade with positive outlook.

Coordinating Economic Minister Darmin Nasution expressed his disappointed over the agency’s uncertainty in affirming Indonesia’s rating. "I am confused. They asked [use to improve] this, and we did. But then they said we're still lacking in another areas," he said on Thursday.

Previously, Darmin said, S&P declined to upgrade Indonesia’s rating to investment grade, on the back of “fiscal concerns”, but after Indonesia shaped the state budget to a more realistic one, S&P brought up another issue to settle. (ags)

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