President Must Keep Positive Credit Rating

Indonesia has received another shot in the arm and further recognition of its status as a middle-income economy by Moody’s Investors Service. The latest positive outlook by the rating agency is affirmation of the country’s steady progress and the government’s reform efforts.

Moody’s Investors Service has raised Indonesia’s current sovereign credit rating outlook from stable to positive, citing the country’s strong economic prospects and more effective macroeconomic policy framework. “The improvement in the outlook was prompted by Indonesia’s relatively strong growth prospects and an increasingly effective macroeconomic policy framework,” said Aninda Mitra, a Moody’s vice president and sovereign analyst for Indonesia.

The rating outlook is an indication that the country is on the right path both economically and politically. With this statement, Moody’s is signaling that a ratings upgrade is in the offing if the upcoming presidential election proceeds smoothly. Finance Minister Sri Mulyani Indrawati hinted as such in welcoming the outlook upgrade, saying that “it shows our economy has lower potential risks [of default] compared with others that they have appraised — the benchmark countries that are included in our group. A positive [outlook] means there is a greater possibility of a ratings upgrade.”

Coming so close to the polls, this latest piece of positive news should alert voters to the critical importance of electing the right candidate for the presidency. Any shift in the direction of economic policy could alter investor sentiment in the blink of an eye and undo the progress made in the past five years. Indonesia must maintain and continue with its free-market policies. Voters must treat empty promises and nationalistic rhetoric in the run-up to the election with caution. While any government must protect the interests of the country and its people, we cannot afford to be protectionist in our economic position or erect trade barriers.

July’s presidential election could pave the way for continued economic prosperity and political stability, which would create new opportunities for the populace. Indonesia’s immediate future looks secure but much can still go wrong. Voters must choose wisely and not be easily swayed by campaign posturing. There remains a shortage of detailed explanations about the economic policies put forth by the candidates and the election is less than four weeks away.

The country is now on a path of sustainable growth and it would be tragic if we veered off course at this critical juncture. Indonesia is on the cusp of an upward trajectory. Moody’s latest positive outlook should be welcomed and built upon. Political stability is the key to long-term economic expansion and the election could pave the way for the beginning of a new phase in the country’s forward march.