S&P: Indonesia outlook positive

Standard & Poor's said it revised the outlook on the long-term sovereign credit ratings on the Republic of Indonesia to positive from stable. At the same time, the B/B foreign currency and B+/B local currency sovereign ratings were affirmed.

"The outlook revision reflects a continuing progress in macroeconomic stability, evident from a stable exchange rate, falling inflation, and lower interest rates," said S&P credit analyst Agost Benard. "Further progress in these areas could help reduce the vulnerability of the government's fiscal position."

The government has set a fiscal deficit target of 1.2% of GDP in 2004, and its interest servicing requirement remains high. However, a successful reprofiling of its domestic debt has extended the average debt-maturity profile to 7.8 years from 4.4 years, and enabled a reduction in the country's debt-service burden. Interest payments are expected to fall to below 20% of general government revenues in 2004 from 30% in 2002.

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