Electoral Outcome In Indonesia Has Neutral Impact

Bareksa.com - Reported by IQPlus, Moody's Investors Service says that the uncertain outcome in Indonesia's (Baa3 stable) presidential elections on Wednesday does not have a material impact on the sovereign's credit quality.

We do not expect large policy shifts regardless of the official election result, as both camps have sought to address largely the same issues such as infrastructure development with differences only in their respective approaches. In some instances, policy positions had also converged, most notably on the further reduction of fuel subsidies.

Regarding policy challenges, Indonesia's next president faces a widening budget deficit, which poses a threat to rules that have anchored fiscal policy over the past decade. Despite hiking fuel prices last year, the outgoing government's inability to broaden the tax base and improve revenue performance has contributed to the erosion of Indonesia's fiscal position.