JCR Raises Indonesia's Credit Rating to BBB

Wahyu Dwi Anggoro    •    08 Februari 2018 20:22 WIB
indonesian economy (en)
JCR Raises Indonesia's Credit Rating to BBB
Illustration (Photo: Antara/Andika Wahyu)

Jakarta: Japan Credit Rating Agency (JCR) raised Indonesia's sovereign credit Rating by one level to BBB/Stable Outlook on Thursday, February 8, 2018.

"JCR has upgraded its ratings by one notch and changed the outlook to Stable. JCR has also upgraded its country ceiling for Indonesia by one notch to BBB+," the agency announced.

"the government led by President Joko Widodo has been pressing ahead with structural reforms aimed to promote sustainable growth through reduced dependence on the natural resources sector. The effect of the reform initiatives has emerged in various aspects three years since the inauguration of the administration," the agency said.

The country's current account deficit has been narrowing in recent years amid the growth of exports in the non-natural resources sector. The deficit is expected to stay below the manageable level of 2% of GDP in 2018-2020 as it is estimated in 2017.

The banking sector has been retaining its soundness, with its capital adequacy ratio and nonperforming loan ratio standing at 23.20% and 2.89%, respectively, at the end of November 2017. financing through the financial markets has
maintained robust growth in recent years as the total amount of issuances of stocks, bonds, and medium-term notes (MTN) increased by 29.7% year-on-year in November 2017.

"Japan Credit Rating Agency’s upgrade on Indonesia’s rating demonstrates the increase confidence of international organization on Indonesia’s strong economic fundamentals as well as the government’s commitment to strengthen the structure of the economy," Bank Indonesia Governor Agus Martowardojo stated.

"This achievement also reflects the concerted policy effort between Bank Indonesia and the government in maintaining macroeconomic and financial system stability providing a conducive environment for a sustainable economic growth," he added.