Indonesia’s currency tumbled 2.1% this week on concern the plan to split the cost of funding the budget deficit with the central bank will weaken its independence and trigger rating downgrades.
JAKARTA: The Indonesian government’s plan to sell billions of dollars of bonds to the central bank to finance a widening fiscal deficit poses no immediate threat to the nation’s credit rating, according to S&P Global Ratings.
S&P, which already has a “negative” outlook on Indonesia’s rating, makes no distinction between the debt issued by the government, be it to the central bank or to commercial investors, in assessing its fiscal impact, according to Kim Eng Tan, a sovereign analyst.
Moody’s Investor Service said separately that inflation is well-anchored in Indonesia and the credit outlook would depend on debt duration and other constraints.
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