Fitch affirms Indonesia's rating at 'BBB' with stable outlook

By Ovunc Kutlu

ANKARA (AA) – Fitch Ratings announced Tuesday it has affirmed Indonesia’s long-term foreign currency rating at “BBB” with a stable outlook.

The global ratings agency said it expects Indonesia’s economic growth will recover to 5.6% in 2022 and 5.8% in 2023, significantly up from 3.7% last year when a COVID-19 wave driven by the Delta variant disrupted economic activity.

“The government has significantly increased subsidies to shield households from high international oil and food prices, allowing for unchanged domestic prices for the most used types of subsidized fuel,” read a statement.

However, the agency warned that a weakening of the policy framework that could undermine macroeconomic stability may lead to a negative rating action.

Moreover, a sustained decline in foreign exchange reserve buffers may also lead to a downgrade.

A material reduction in external vulnerabilities and significant improvement of structural indicators may lead to a positive rating action, it added.