Indonesian finance minister says ‘not strong enough reasons’ for Moody’s rating cut

Indonesian Finance Minister Purbaya Yudhi Sadewa pushed back at Moody’s Ratings’ decision to lower the country’s outlook, saying that the nation’s improving growth and controlled deficit were unlikely to result in a credit rating downgrade.“Our economy is improving, deficit is still under control – compared to other countries, we are still in a better position,” Purbaya told reporters in Jakarta on Friday. “There are not strong enough reasons for a downgrade. In fact, we should gradually see the prospect of an upgrade.”Indonesian stocks, bonds and the rupiah slid on Friday after Moody’s changed the outlook on the country’s Baa2 rating from stable, citing “reduced predictability in policymaking, which risks undermining policy effectiveness and points to weakening governance”.Moody’s also faulted “less effective policy communication” from authorities in its Thursday evening statement, which came hours after Indonesia reported faster-than-expected fourth quarter growth.People sit near an electronic board showing the stock market index at the Indonesia-stock-exchange" class="entity-link entity-organization" data-entity-id="25763" data-entity-type="organization">Indonesia Stock Exchange in Jakarta on Monday. Photo: ReutersThe Moody’s warning came amid broader concerns about Indonesia which have weighed on stocks and the rupiah. MSCI last month warned about the country’s investability, while deficit spending last year approached a cap of 3 per cent of gross domestic product – a level viewed as almost inviolate outside exceptional times such as the pandemic.