Debt Ranking Improves, Sri Mulyani: Good, But...



Mahinda Arkiyasa

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  • TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati expressed her optimism regarding the statement made by international ranking firm Standard & Poor (S&P). S&P's statement revealed that Indonesia has achieved better debt ranking, which in some context, can help to attract more investment.

    "In terms of reputation yes [it is better], capital inflow, yes. But for foreign direct investment, it requires a more ambitious policy," said Sri Mulyani on Saturday, June 1, 2019.

    Previously, S&P improved Indonesia's debt ranking by one level from –BBB to BBB with a more stable outlook. The improvement was one level higher compared to the normal ranking progression, which supposed to be –BBB/positive. In addition, S&P also improved Indonesia’s sovereign credit rating from A-3 to A-2.

    S&P decided to improve the ratings due to economic growth prospects of Indonesia, and prudent fiscal policy. Low government debt ratio and moderate fiscal performance had also helped in improving short term credit rates.

    Minister Sri asserted that relying on rankings determined by international ranking companies is not enough to attract investments. Sri argued that the government still needs to simplify regulations.

    According to Sri, regulation remains a challenge for the Indonesian government in increasing foreign investments. In addition, Sri said that the government needs to improve infrastructures and natural resources if we wish to attract foreign investors.

    "Factors like infrastructure, human resources, including productivity, less complicated regulations, and corruption, are the things that we need to continue to eradicate," Sri concluded.