Fitch ups Indonesia view to positive

Fitch Ratings said it revised the outlook on the foreign- and local-currency issuer default ratings of the Republic of Indonesia to positive from stable while affirming both ratings at BB-. Indonesia's issuer default rating also was affirmed at B and the country ceiling at BB.

The revision ratings reflects the authorities' commitment to maintaining economic stability and fiscal discipline and the government's stronger top-down policy intent to implement a structural reform agenda aimed at improving the investment climate, Fitch said.

Public finances and improving surveillance of broader fiscal risks are Indonesia's fundamental rating strengths, the agency said. Fitch said it forecasts the fiscal deficit will stay manageable at 1.1% of GDP this year, while the government debt-to-GDP ratio should drop to about 38% this year, levels last seen only in 1997 and better than the 41% median for the BB rating category. Nonetheless, the debt-to-revenue ratio of 212% in 2006 is less favorable than the BB median of 162% and further tax efforts are needed to increase revenue, Fitch said.

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