S&P unlikely to revise Indonesia's status

October 27, 2016, 10.32 AM  | Reporter: Asep Munazat Zatnika
S&P unlikely to revise Indonesia's status


JAKARTA. Standard & Poor (S&P) is unlikely to upgrade the status of Indonesia to the level of ‘investment grade’. As reported by Bloomberg, Director Asia-Pacific Sovereign Rating S&P Kyran Curry, the high risks of private sector debts is the main reason for S&P to not recommend status upgrading for Indonesia.

The main indicator is the increase in the ratio of non-performing loan (NPL). As of July 2016, the NPL ratio increased from 2.7% as per July 2015 to 3.2%.

Head of Fiscal Policy Agency (BKF) at Ministry of Finance Suahasil Nazara said that the reason of S&P to not upgrade Indonesia’s status is unacceptable. “We have followed all of their suggestions”, he said.

In terms of tax revenues, Suahasil mentioned that Indonesia has responded S&P’s suggestion by cutting the budget. Furthermore, Indonesia is succeeded to manage the debt ratio at the secure level, which is 27.4% of Gross Domestic Product (GDP).

According to Suahasil, the NPL ratio of Indonesia’s banking sector is still at secure lavel, which is under the maximum level of 5%. Suahasil added that S&P is unlikely to have intention to revise the status of Indonesia to ‘investment grade’. “Every year S&P always have different reasons”, he said.

Economist at Samuel Asset Manajemen Lana Soelistianingsih mentioned that the statement of Kyran Curry does not necessarily represent the assessment of S&P of the auditing process, which will be carried out in 2017.

Lana said that Indonesia actually has better debt ratio to GDP compared to other countries. S&P even had included some countries with 50% or above of debt ratio to GDP, such as the Philippines to the level of ‘investment grade’.

Indonesia also can manage debt risk in the private sector, as BI (the Central Bank) has required corporates to do hedging when creating foreign debts. Furthermore tax amnesty had also become new sources of domestic funds.

In other words, Indonesia still has a chance to have S&P’s revision on the current debt status of ‘BB+’ or ‘speculative’.

(Muhammad Farid/Translator)

Cek Berita dan Artikel yang lain di Google News

Editor: Dupla Kartini

Latest News