Standard & Poor is considered one of the best rating agencies in the world and trusted by many investors to look for the company and country’s rating in terms of investments. S&P has now termed that Indonesia could be the next best-investing country where investors could expect better results on their investments. The ratings for various countries was released on Friday which led Jakarta’s shares to rise high and estimated that the investments would move in the Southeast Asia’s biggest economy. Fund managers confirmed that the investments graded given by S&P are in inclination with the rating awards given last year by Fitch and Moody.
This could be a double advantage for Indonesia in terms of welcoming all new pool of investments after receiving the award and the current higher ratings from S&P. This also highlights one important factor that when the bonds are issued the economy would get the investments at cheaper cost. S&P has a stable outlook for the future investments in the economy of Indonesia and hence has given a BBB- credit rating. This has been a very good day for the JKSE Jakarta share market where the index moved 3 percent after the announcement of the S&P ratings and this is considered to be the biggest intraday percentage increase in the index since 2015 when it increased by 2.6 percent.
According to S&P, the current fiscal policy and economic conditions are leading to lower risk of the investments in the country which makes it more potential for a wide range of investments. Indonesia has a very focused approach on realistic budgeting giving them an edge for investments but needs to ensure that there is no shortfall in the revenue in near future because that would lead to widening the gap in the government deficits. They have an indication to receive $450 million in infrastructure which would be helpful to restore economic growth of the country. This is not the first time Indonesia received better ratings from any agency but there is fluctuation in their ratings for a long time.
S&P earlier has given good ratings to Indonesia in May 2015, when the President Joko Widodo abolished the gasoline subsidy in the country. But next year again they failed to get a better rating due to weak corporate credit quality in the country and poor government revenue collections policies. This forced the President to make some necessary changes in the cabinet ministry and Sri Mulyani Indrawati was assigned the responsibility of the finance ministry.