Indonesia Walks a Fine Line Between Bailouts, Downgrades

Indonesia Walks a Fine Line Between Bailouts, Downgrades

Since surviving an IMF bailout and violent change of government during the Asian financial crisis, Indonesia has shown an uncanny resilience in bouncing back from global selloffs.. As the coronavirus outbreak forces SOE defaults and restructuring to play out on the international stage, investors are now wondering whether Jakarta - which still enjoys an investment-grade rating - can keep its distance and avoid being dragged into one bailout after another.. But PT Garuda Indonesia, the national airline 60% owned by the government, makes a better example of the debt labyrinth that Jakarta can't easily escape.. To blunt damage from the pandemic, Indonesia removed its long-time 3% fiscal deficit cap and raised it to a new target of 5.1%, translating to additional financing needs of $27 billion..