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Indonesia gets investment grade status

JAKARTA, Dec. 15 (Xinhua) -- Fitch Ratings agency on Thursday unexpectedly raised Indonesia's sovereign debt status to investment grade, a move expected to speed up foreign investment in the country struggling to build massive infrastructure to spur economic growth, an official from the Finance Ministry said Thursday.

The international rating agency increased Indonesia's rank from BB+ to BBB- with stable outlooks, said Rahmat Waluyanto, director general for treasury of the Finance Ministry. "Today (Thursday) the Fitch raised our status to investment grade," Waluyanto told Xinhua by phone.

The new status is expected to speed up foreign investment in Indonesia which has enjoyed rapid capital inflows for more than two years before the debt crisis struck the United States and Europe.

Supported by huge domestic demand, Indonesia, with a population of more than 238 million, survived the global financial crisis in 2008-2009 by registering a 4.5-percent economic growth, the third highest after China and India while other Asian peers were suffering from strong contraction.

Indonesian Investment Coordinating Board (BKPM) aims to increase the country's investment to 500 trillion rupiah (some 55. 57 billion U.S. dollars) by 2014 from this year's target of 240 trillion rupiah (about 26.67 billion U.S. dollars), M.Azhar Lubis, deputy of controlling and implementation of investment of the board said on Dec. 8.
It also targets to increase the investment to 283 trillion rupiah (some 31.44 billion U.S. dollars) and 383 trillion rupiah ( about 42.56 billion U.S. dollars) in 2013, Lubis said.
Indonesian Central Bank has kept the interest rate steady at 6. 0 percent in an effort to lure investors to the country.

Indonesia's economy may not be seriously impacted by the ongoing gloomy global economy as the Central Bank, the World Bank and the Indonesian government have forecast a growth rate of more than 6 percent for next year.

With low debt to GDP ratio of about 26 percent and lower deficit, Indonesia has the capacity to launch financial stimulus to spur economic growth as global demand for commodity weakens.

The Central Bank has said it would intensify intervention on currency and bond markets for stabilization this year and next year.