The Republic of Indonesia

1. The Republic of Indonesia Rating Presentation for Moody’s Ministry of Finance 21 July 2009

2. Indonesia’s Credit Strengths Indonesia would like to solicit a rating upgrade to ‘Ba2’ from Moody’s. Indonesia has demonstrated comparatively strong resilience with solid growth prospects in the face of the global financial crisis Resilient economy driven by increasing private consumption and strong GDP growth Robust external liquidity further enhanced by liquidity and trade financing support Positive economic fundamentals supported by falling inflation and declining debt-to-GDP ratio Proactive, effective government policy response to stimulate growth and ensure financial system stability Reduced funding reliance on international capital markets Prudent fiscal management with strong commitment to fiscal sustainability Flexible state budget to account for potential downside risk with conservative assumptions Minimal impact on budget deficit from any oil price movement

3. Agenda • Update on Indonesia’s Economic Performance • Policy Response to the Global Financial Crisis • Budget Financing and Debt Management • Conclusion

4. Update on Indonesia’s Economic Performance

5. Indonesia’s Economic Backdrop Indonesia’s economy continued to demonstrate a resilient performance amid a slowdown of economic activity on a global basis • Indonesia’s resilient economy is driven by strong private consumption and positive GDP growth • GDP is expected to grow at 4.3% for 2009 • 1H’09 GDP grew by 4.4% y-o-y, led by household and government consumption • Substantial improvements are evident in economic fundamentals, with falling inflation, declining debt-to-GDP ratio, and strong balance of payments position • The Government of Indonesia has pro-actively implemented an effective government policy response to stimulate real sector growth and to stabilize the financial system • Bank Indonesia cut rates by 275 bps since November 2008, while still leaving adequate room for further cuts • Fiscal stimulus package of USD 7 billion to stimulate real sector growth • Indonesia also continues to adopt prudent debt management in an effort to further diversify its funding sources • Despite the Friday (17 July) bombs in Jakarta, the market still shows its confidence on Indonesia as evident on the Indonesian CDS that continues to tighten by 10 bps to 260/280 (as of NY open Monday 20 July), Indonesian bonds slightly rally, IDR stable around IDR 10.200, and Indonesian Stock Exchange Index down only by 0.5% (17 July closed). Indonesia’s Economic Fundamentals Remain Solid With Positive Growth Momentum

6. Indonesia GDP Growth – Weathering The Crisis Indonesia continues to achieve strong positive GDP growth despite the recent crisis - driven by government fiscal policy, consumption and investment GDP Growth(1) Pre Crisis (1994 – 1996) (2) Crisis Period (1997 - 1999) (2) Post Crisis (2000 – 2007) (2) Q1’08 – Q1’09 (2) Source: Ministry of Finance. • GDP growth rates on constant pricing basis. 1994 - 1999 GDP based on 1993 pricing level. 2000 GDP and thereafter based on 2000 pricing level • Reflects average y-o-y growth rates

7. Indonesia is Growing Strongly Compared with Other Emerging Markets and Asian Economies Only Indonesia, China and India are maintaining positive growth through the economic crisis Indonesia’s Economic Growth vs. BRIC and Southeast Asian Economies(1) Q1’08 Q2’08 Q3’08 Q4’08 Q1’09 Source: Bloomberg 1. Countries with GDP exceeding USD 100 billion in 2007

8. 2005 2006 2007 2008 2009 Indonesia’s Macroeconomic Environment Remains Stable Positive economic fundamentals allow further room for monetary policy easing Headline inflation Trending Down from Peak BI still has Room to Lower the Policy Rate Source: Bank Indonesia Source: Bloomberg Foreign Reserves Remain Healthy Balance of Payments – Sharp Recovery in Q1’09 (1) Source: Ministry of Finance, Bank Indonesia 1. As of 12 June 2009 Source: Ministry of Finance, Bank Indonesia 1. As of 12 June 2009

9. % change in stock index % appreciation against USD Capital Inflow to Indonesia Has Recovered Positive net foreign buying of Indonesian securities has driven the outperformance of the stock market and the stability of the exchange rate Stock Indices & Exchange Rates Stable Rupiah Exchange Rate And Stock Market Recovery Source: Bloomberg, up to 17 July 2009. Stock Net Foreign Buying 2009 Bond Net Foreign Buying 2009 Source: MOF, as of 9 July 2009. Source: MOF, as of 9 July 2009.

10. Economic Impact on Jakarta Bombs JW Mariott, August 5th 2003 Exchange Rate Stock Index Australian Embassy, September 9th 2004 Stock Index Exchange Rate

11. Economic Impact on Bali Bombs Bali, October 13th 2002 Stock Index Exchange Rate Bali, October 1st 2005 Stock Index Exchange Rate

12. Exchange rate movement on several Bomb Attact on Indonesia. Exchange Rate BOM BOM Sumber: Bloomberg

13. Stock Index after several Bonb attack in Indonesia Stock Index after Bomb attack BOM Sumber: Bloomberg

14. Recent Bomb Attact doesn’t affect Investor positive perception to Indonesia

15. Indonesia had the greatest improvement in competitiveness rankings out of all 57 countries surveyed Competitiveness ranking improved 9 places from 51 to 42 Indonesia ranks ahead of the Philippines and Russia in World Competitiveness Also ranks ahead of developed European economies including Italy and Greece In the “stress test” rankings, an indicator of resilience to the global economic crisis, Indonesia is highly placed ranking 33 out of 57 countries Indonesia is particularly highly ranked for socio-political stability Indonesia’s Competitiveness Significant improvement in the global competitiveness scorecard Competitiveness Scorecard - 2009 Ranking Improvement – 2008 / 2009 Southeast Asia BRIC G3 IMD World Competitiveness Center (20 May 2009) “The most spectacular movements are seen for Indonesia, rising from 51st place to 42nd” Source: IMD World Competitiveness Center

16. 2. Policy Response to the Global Financial Crisis

17. Coordinated Monetary and Fiscal Policy Response to Global Crisis Extent of the monetary and fiscal policy response has so far been moderate compared to other countries which provides room for further policy action if needed Policy Rate Cuts since November 2008 Cost of Fiscal Stimulus Program Southeast Asia Southeast Asia BRIC BRIC G3 G3 Source: Bank Indonesia, Bloomberg, as of 23 June 2009

18. 3. Budget Financing and Debt Management

19. Budget Outcome for Fiscal Year 2008 2008 National Budget – Original vs. Realization

20. 2009 Budget Outlook with Safety Net and Crisis Prevention Mechanism The 2009 budget is designed to give the Government enough room to adjust to any potential impact of the global financial crisis Manageable budget deficit of US$12.6 billion or 2.5% of GDP Latest Macroeconomic Indicators 2009 Budget Outlook (in US$) Includes reserves for oil price fluctuation and infrastructure land acquisition Minimal impact on budget deficit from any oil price movements  A US$1 change in the oil price affects the budget deficit by only US$10 million Source: Ministry of Finance

21. Budget Outcome for Fiscal Year 2009 2009 National Budget – Original vs. Outlook

22. The funding requirement of the 2009 budget and debt amortization will be funded by Accumulated 2008 budget surplus of USD 4.9 billion New government debt of USD 18.4 billion of which USD 14.0 billion in government bonds and other securities Additional contingency facilities available from World Bank, ADB and other bilateral G2G agreements (Japan and Australia) USD 9.67 billion of government securities has been already raised, leaving additional requirement of USD 4.33 billion which will be secured through govt. sec and program & project loan 2009 Funding Plan The 2009 budget is designed to give the Government enough room to adjust to any potential impact of the global credit crisis Budget Deficit Financing (in US$) Funding Plan Government Security Issuance (4) Estimates based on new set of assumptions plus additional fiscal stimulus measures Include Contingency Fund facilities from Bilateral and Multilateral source Includes net investments in SOEs As of 17 July 2009 Assumption 1USD = 10,500 for 2009 Budget Outlook.

23. Debt Management and Liquidity Support The 2009 budget is designed to give the Government enough room to adjust to any potential impact of the global credit crisis • In response to volatile market conditions, Indonesia has obtained contingency financing facilities from bilateral and multilateral organizations and other institutional investors • The Government also plans to enhance its debt issuance strategy by: • Developing demand in domestic bond market • Diversifying debt issuance method e.g. Global Medium Term Note Program, regular auctions, private placements, syndicated offerings • Diversifying instruments • Intensifying debt switching and cash buyback • Shortening portfolio duration Liquidity and Trade Financing Support (in USD) In response to forex risk due to volatile market conditions, steps are taken to: • Extend BSA swap with Japan from USD 6 billion to USD 12 billion • Bilateral swaps with China in local currency equivalent to USD15 billion • Trade Financing through IND Exim Bank with JBIC up to USD 500 million

24. National Budget Realization for Fiscal Year 2009 Up to 30 June 2009, budget performance remain on track with IDR 5.6 trillion of deficit and over financing IDR 42.2 trillion 2009 National Budget – Realization YTD June 2009

25. Tax Collection Overview of Tax Collection Tax: Actual vs. Target Duties and Excise: Actual vs. Target

26. Tax Collection by Sector (ISIC-2) by June 2009 Non-oil corporate Income Tax Domestic VAT Import VAT

27. Regional Government Budget Approved Regional Budget 2006 - 2009 Consolidated Deficit for Central and Region Government Outstanding Regional Development Bank Fund in SBI

28. Sensitivity of National Budget 2009 Sensitivity of National Budget 2009 (IDR trillions)

29. 4. Conclusion

30. Conclusion • Sustained economy resilience with strong growth prospects amid the global economic crisis • 4.3% growth projected for 2009 and manageable budget deficit of 2.5% of GDP • Substantial improvements are evident in economic fundamentals • Falling inflation • Strong balance of payments position • Large foreign reserves • Pro-active and effective policy response aims to support the banking system and capital markets, ensure foreign exchange stability and promote real growth through fiscal stimulus • Prudent fiscal management with strong commitment to fiscal consolidation • Declining debt-to-GDP ratio • Diversifying government debt profile • Reducing funding reliance on international capital market • Market confidence on Indonesia remains strong despite the recent bombs attacked in Jakarta Indonesia’s sovereign rating should be upgraded to ‘Ba2’ given its sustained economic resilience, significantly improved economic fundamentals, prudent fiscal policies, as well as strong balance of payments position and external liquidity