Indonesian election neutral for Sovereign Rating: S&P

SINGAPORE - The outcome of Indonesia's close-run Presidential election will have little impact on the sovereign credit rating (BB+/Stable/B; axBBB+/axA-2), according to ratings agency Standard & Poor's. "We expect reform progress to be slow no matter who is elected.” S&P says. “Any boost to policy-making and growth prospects is likely to be insufficient to strengthen the sovereign credit rating."

S&P nevertheless expects some benefits to sovereign credit quality under the next Administration from continued improvements in fiscal and debt metrics, and possibly from stronger external indicators.

"Basic macroeconomic policies are likely to prevail, supporting credit fundamentals. We expect both presidential candidates, Joko Widodo and Prabowo Subianto, to adhere to conservative fiscal and debt management if elected," S&P says.
 
The agency adds that sovereign credit quality improved steadily under the10-year Presidency of Susilo Bambang Yudhoyono, thanks to political and macroeconomic stability. But his Administration had had less micro-economic
success.

Reforms are still needed, S&P says, to boost Indonesia’s growth prospects, diversify its overwhelmingly commodity-driven export profile, and reduce dependence on external funding. www.standardandpoors.com (ATI).