Governor of Bank Indonesia Perry Warjiyo stated that the affirmation of Indonesia's rating of 'BBB' with a stable outlook from Fitch Ratings is a form of international stakeholder recognition for Indonesia's macroeconomic stability and the maintained medium-term economic prospects amid the Covid-19 pandemic.

"Going forward, Bank Indonesia will continue to monitor global and domestic economic developments, take the necessary steps to ensure macroeconomic and financial system stability, and continue to synergize with the government to accelerate the process of national economic recovery," in an official statement in Jakarta, on Tuesday. (23/3).

Fitch maintains the Sovereign Credit Rating of the Republic of Indonesia at BBB (investment grade) on March 19, 2021. Key factors supporting the affirmation of Indonesia's rating are good medium-term economic growth prospects and a low, albeit increasing, government debt burden.

On the other hand, Fitch underlined the challenges faced, namely the dependence on external financing sources, which are still high, low government revenues, and developments on the structural side such as governance indicators and GDP per capita that are still lagging behind other countries with the same rank.

In its assessment, Fitch estimates that Indonesia's economic growth will gradually recover to 5.3% in 2021 and 6% in 2022, after contracting 2.1% in 2020 due to the Covid-19 pandemic.
The government stimulus and exports, along with the support of improvements in commodity prices, drive the economic recovery. 

Also, infrastructure development will support the momentum for economic growth. Recovery will depend on handling the spread of Covid-19, primarily through accelerating vaccinations.

In the medium term, Fitch projects that the Job Creation Law which aims to remove various investment barriers will drive economic growth.

According to Fitch, Bank Indonesia's support for fiscal deficit financing has helped reduce interest costs and supported the acceleration of economic recovery. However, BI should emphasize that this step is temporary in nature so that it does not pose a risk of reducing investor confidence in the credibility of monetary policy.