Fitch Ratings: Broad economic policy continuity expected in Indonesia if Prabowo wins
JAKARTA: Fitch Ratings expects broad economic policy continuity in Indonesia under Prabowo Subianto, who is projected to win in the republic’s presidential elections based on unofficial quick vote results.
Its head of Asia-Pacific sovereigns Thomas Rookmaaker said Prabowo’s projected victory should reduce near-term political uncertainty, although the announcement of official results might take another month.
“Under a Prabowo presidency, (we expect) a continued focus on infrastructure development, including in the new capital city, and policies supporting commodity downstream and expansion of battery and electric vehicle manufacturing.
“Policy settings to maintain macro stability should continue in the near term, as the new president will not be sworn in before October,” he said in a note on the election.
However, he said uncertainty will remain for the mediumterm fiscal outlook until the next government presents its fiscal priorities, likely postinauguration.
Rookmaaker believes that medium-term fiscal risks have risen due to some of Prabowo’s costly campaign promises, such as a free lunch programme equivalent to about two per cent of gross domestic product (GDP).
“Our baseline scenario is still for government debt to remain on a gradually declining path, assuming a majority in Parliament will continue to prefer prudent fiscal policies and fiscal deficits of below three per cent of GDP,” he said.
Rookmaaker highlighted that the quick vote results indicate the need for a coalition of several parties in Parliament, and the country’s track record underscores broad support across the political spectrum for adherence to the deficit ceiling.
He added that a marked improvement in the government revenue/GDP ratio, a policy goal stated by Prabowo during his campaign, would enhance public finance flexibility and Indonesia’s credit profile.
In the presidential race held on Feb 14, Prabowo is reportedly ahead, with preliminary counts suggesting he has garnered over 50 per cent of the votes.
According to Litbang Kompas, with 95.45 per cent of sample ballots counted, Prabowo has secured 58.52 per cent of the vote, while Anies Baswedan and Ganjar Pranowo have received 25.25 per cent and 16.23 per cent, respectively.
Similarly, Poltracking’s data shows Prabowo leading with 59.35 per cent, followed by Anies at 24.37 per cent and Ganjar at 16.28 per cent, based on 95.67 per cent of sample ballots tallied.
Although these figures are not official, they are anticipated to closely align with the final results to be announced by the Election Commission on March 20. — Bernama