Economic Stabilization, Reform Key For RI, Says Fitch
Bareksa • 11 Jul 2014
A woman holds Indonesian rupiah notes as she waits in line outside a mobile bank in a park in Jakarta. (REUTERS/Darren Whiteside)
Indonesia was vulnerable to external pressures.
Bareksa.com - Fitch Ratings says with unofficial quick counts pointing to a narrow win for presidential candidate Joko “Jokowi” Widodo, the key issue for sovereign credit and rating over the next 12 months was whether Indonesian authorities continued to prioritize economic stability and sustainability.
Fitch says the government and Bank Indonesia’s (BI) efforts to tighten monetary policy and allow for a more flexible exchange rate have had a positive effect on the external position.
“There is little in either candidate’s election platform to suggest they might re-direct current economic policy in the short term. Nonetheless, ongoing challenges to stability highlight the importance for the credit profile of economic policy management,” said Fitch in a release made available to The Jakarta Post on Thursday.
The rating agency said Indonesia was vulnerable to external pressures owing to the current account flipping into deficit in 2012 to which loose monetary policy had contributed, relatively high commodity dependence amid weakening prices for Indonesia’s key exports and shallow domestic financial markets.