Fitch Updates Outlook on Indonesia Fiscal Deficit
Fitch Ratings says a temporary breach of the three percent deficit ceiling due to Middle East tensions will not trigger an immediate credit rating downgrade. Analysts warn that sustained higher spending or policy missteps could still impact long term debt stability.
Indonesia has the flexibility to exceed its statutory 3% fiscal deficit ceiling without facing an immediate credit rating downgrade, provided the breach is a temporary measure to counter economic fallout from the conflict involving Iran, according to a senior official at Fitch Ratings. While the agency recently lowered the nation's outlook to negative, it indicated that a short-term fiscal expansion would not necessarily trigger a lower rating if accompanied by a transparent plan for future consolidation.
