JAKARTA: Indonesia’s tax amnesty brought in revenue, which lowered the fiscal deficit and enhanced the appeal of government bonds, says Allianz Global Investor’s David Tan.
“The tax amnesty in Indonesia has been impressive,” said David Tan, portfolio manager and chief investment officer for Asia Pacific fixed income. “It yielded a high amount of tax revenues, leading to low fiscal deficit and replenishment of foreign reserves.”
In that favourable environment, the country’s ongoing reforms are supportive of further investment and infrastructure spending.
Ratings agency Standard & Poor’s upgraded Indonesia’s debt to investment grade in May, matching the ratings by Moody’s and Fitch, and ending the long period of ratings disparity (Moody’s has rated Indonesia as investment grade since 2012).
As an effect of that move, Indonesian bonds will be included in the JPMorgan Government Bond Index Emerging Markets on 31 July.
