Indonesia upgraded by Fitch Ratings

Fitch Ratings has upgraded Indonesia, returning the country’s debt to investment-grade status after 14 years as junk.

The agency revised Indonesia’s long-term foreign and local-currency issuer default ratings from BB+ to BBB-, placing the country’s debt on a par with that of neighbour India.

Indonesia was downgraded by Fitch in December 1997, losing its investment-grade rating during the Asian financial crisis.

Philip McNicholas, director in Fitch’s Asia-Pacific sovereign ratings group, says: “The upgrades reflect the country’s strong and resilient economic growth, low and declining public debt ratios, strengthened external liquidity and a prudent overall macro policy framework.”

Fitch expects Indonesian GDP growth to average more than 6% a year between now and 2013, despite the turmoil on the global economic stage. The domestically-orientated economy and a lack of reliance on external financing supports this optimism, as the country is deemed largely resistant to external shocks.

However, the ratings agency warned that weaknesses such as low average incomes, poor infrastructure and corruption can still be found in the country.

Strong weightings to Indonesia can be found in the portfolios of Mark Mobius’s Templeton Asian Growth fund, Teera Chanpongsang’s Fidelity Emerging Asia fund and SooHai Lim’s Baring ASEAN Frontiers fund.

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