Moody's may upgrade Indonesia

Moody's Investors Service said it placed Indonesia's B2 foreign and domestic currency ratings and B3 foreign currency bank deposit ceiling on review for possible upgrade in light of continued, steady improvement in government finance. The country's Baa2 local currency guideline is not under review.

The government's budget deficit in 2005 was under 1% of GDP, continuing a record of only small deficits for the past several years. Moody's said this fiscal prudence has led to a steep decline in the ratio of government debt to GDP, and the ratio of government debt to revenue has shown a similar trend.

However, the agency said Indonesia continues to face high external debt, a relatively low level of foreign direct investment and monetary and exchange-rate policy vulnerabilities

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