latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/s-p-global-ratings-revises-indonesia-s-outlook-to-negative-58081157 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

S&P Global Ratings revises Indonesia's outlook to negative

Blog

Latin American and Caribbean Market Considerations Blog Series: Focus on LGD

BLOG

Banking Essentials Newsletter: June Edition

Case Study

กรณีศึกษา A Bank Takes its Project Finance Assessments to a New Level

Blog

Financial Institutions Factor Transition Risk into Climate-Related Stress Testing


S&P Global Ratings revises Indonesia's outlook to negative

S&P Global Ratings revised Indonesia's outlook to negative from stable while affirming its "BBB" long-term and "A-2" short-term sovereign credit ratings on the country.

"The negative outlook reflects our expectation that Indonesia faces additional fiscal and external risks related to the COVID-19 pandemic in the next 24 months," the rating agency said.

Indonesia's GDP growth is projected to slow to 1.8% in 2020, its lowest level since 1999, but is expected to recover strongly over the following years, S&P Global Ratings said. The rating agency's affirmation of ratings "reflect the country's stable institutional settings, strong growth prospects, and historically prudent fiscal policy settings," it said.

However, Indonesia's external debt position has deteriorated with the fall in value of the rupiah, which means that external risks will persist for the next few years. Moreover, President Joko Widodo signed off on a regulation that will allow the government to spend more to combat the effects of the pandemic.

Consequently, the country's deficit is expected to reach 4.7% this year, the highest level in decades, with two more years of the deficit at or exceeding 3.0% of GDP. Meanwhile, S&P Global Ratings projects total external debt to elevate to about 128% of current account receipts this year.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.