The Impact of RI Rise on Economic Revenue

Step The international rating agency Moody's Investor Service raised Indonesia's debt rating to Baa2 with a positive outlook assessed to lower Indonesia's government debt costs in the short term.
Joshua Pardede, an economist at PT Bank Permata Tbk, said that the upgrade of Indonesia's debt rating by Moody's will have a positive impact on Indonesia's loan financing. Indonesia's debt rating upgrade may decrease credit default swap (CDS). CDS is a fundamental indicator and benchmark perceptions of investment risk.
"Hope to upgrade (Indonesia's debt rating), CDS will go down," said Joshua when contacted Liputan6.com Friday (13/4/2018).
In addition, Joshua said, the cost of government debt is also expected to be lighter. This is considering the yield of government bonds will go down. It is expected that 10-year government bond yields will fall by around 10 basis points-20 basis points in the short term.
Head of Sales and Marketing PT Ashmore Assets Management Indonesia, Steven Satya Yudha said, foreign investors will again increase the allocation of investment, especially on the government bond market. On the other hand, the cost of government debt is also lower. This is supported by controlled inflation and the upward sentiment of Indonesia's debt rating by Moody's. "The yield should be stable at 6.5 percent in the short term," Steven said when contacted by Liputan6.com.
In addition, PT Ashmore Assets Management Indonesia said, Indonesia's debt rating upgrade by Moodys put Indonesia on be par India.

However, Steven warned that the euphoria of Moodys's upgrading of Indonesia's debt rating was limited. It reminded that there is a potential increase in current account deficit in the first quarter of 2018. The trade balance deficit is likely to reach USD 1 billion in the first quarter of 2018.
PT Ashmore Assets Management sees unless there is a major reversal to the trade balance. A trade deficit of two percent was considered difficult to achieve. Moreover, there is a bigger increase in imports due to increases in capital goods for investment and an increase in subsidies in the State Budget (APBN).
While Joshua see, the challenges faced by Indonesia despite an increase in Indonesia's debt rating is the direction of interest rate policy by the central bank. The central bank of the United States (US) or the Federal Reserve will raise interest rates by around 50 basis points by 2018. It will also be followed by developing countries. Joshua said investors will see how quickly the Federal Reserve raised interest rates. However, Joshua estimates, Bank Indonesia (BI) will still keep interest rates 4.25 percent.
Other external factors such as geopolitical conditions and trade wars also affect the condition of Indonesian financial markets. Domestically, Joshua said the impact of rising oil prices and energy subsidies was highlighted by international rating agencies. He considered, the increase in world oil prices can be positive for state revenue. The Government of Indonesia is very cautious in maintaining the fiscal so that it becomes a positive sentiment. "Market players' concerns will not be proven because the government is also very prudent in the fiscal sector," he said.