Fitch Ratings announced on Monday that it has lowered its outlook on Indonesia’s sovereign credit rating to stable from positive. Fitch’s credit rating report attributed the downgrade to risk to Indonesia’s external balances. Fitch cautioned that Indonesia needed to attract capital inflows, particularly in the form of foreign direct investment, and also stem capital outflows. Unless Indonesia does this it could risk an interim rundown of its foreign exchange reserves. Fitch also suggested that the government needs to adopt policies to take the pressure off from the balance of payments.
Fitch advised government to addressed investors is concerns, especially over issues such as labour laws, local government regulations, corruption, etc. The rating report expects Indonesia’s fiscal deficit at below 1% of GDP.