Jakarta. The central bank has urged credit rating agency Standard & Poor's, or S&P, to raise its rating for the country's sovereign debt from junk bond status to reflect a number of recent reforms.
S&P is the only one of the three major rating agencies to rate Indonesian sovereign debt so low.
Speaking at an investment conference late on Thursday (18/05), Bank Indonesia's (BI) deputy governor Perry Warjiyo said S&P should now upgrade Indonesia's ratings given that all aspects of the economy have improved.
"We already provided them all informations on our good progress and good outcome, which need to be rewarded with ratings," Warjiyo said.
Aside from the government's reform initiatives, Warjiyo cited Indonesia's stronger external balances, fiscal management and financial markets.
Fitch Ratings upgraded Indonesian sovereign debt to investment grade in 2011 and Moody's Investor Services followed in 2012. They have both given Indonesia a "positive" credit outlook, signalling chances of an upgrade in the near future.
The central bank on Thursday announced its decision to keep its policy interest rate unchanged, citing a number of risks including a "big chance" that US interest rates will rise in June.
Indonesia's current account deficit shrank to 1 percent in the first quarter, Warjiyo said, significantly smaller than the deficit in 2013, which was more than 4 percent, which had led to heavy capital outflows and a more than 20 percent drop in the rupiah.
Southeast Asia's largest economy also has ample foreign exchange reserves, he said, adding that 90 percent of companies are currently compliant with BI's mandatory hedging rules for foreign debt, making currency mismatch risks low.
Meanwhile, Indonesia's financial market has grown considerably, and the domestic foreign exchange market is now around five times bigger than in 2013, the deputy governor added.
Indonesian officials told S&P officials who visited Jakarta earlier this year that the credit rating agency was already late making an upgrade. S&P does not disclose the timing of revisions to ratings.
S&P's last statement on the country's sovereign ratings in June 2016 mentioned worsening corporate credit quality as the main reason for holding back an upgrade.