The Republic of IndonesiaThe Republic of IndonesiaAccelerating Momentum

January 2008

DisclaimerDisclaimer

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Summary Terms of the OfferingSummary Terms of the Offering

The Republic of Indonesia

Moody s: Ba3 (stable)S&P: BB- (stable)Fitch: BB- (positive)

Reg S / 144A

US$ benchmark

Fixed Rate Senior Unsecured Notes

10 years and / or 30 years

General funding purposes

Singapore Stock Exchange

New York

Barclays Capital, HSBC, Lehman Brothers

Issuer

Ratings

Format

Offering Size

Maturity

Use of Proceeds

Listing

Instrument

1

Governing Law

Bookrunners

Table of ContentsTable of Contents

Economic Performance

Monetary Policy

Fiscal Policy

Government Debt Profile

Section 1

Section 2

Section 3

Section 4

Economic Performance

Section 1

Accelerating Economic GrowthAccelerating Economic Growth

Indonesia: Real GDP Growth

6.1%5.9% 5.8%

5.0% 5.0% 5.0%

5.9%6.1% 6.0%

6.3%6.5% 6.4% 6.3%

7.0%6.8% 6.7%

5.8% 5.7%5.4%

6.6% 6.6% 6.5%

7.0% 6.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07E 2007E

GDP Growth Non Oil & Gas Growth

Source: Ministry of Finance, IMF World Outlook Oct 20071. Newly Industrialized Asian Economies is composed of 4 areas: Hong Kong SAR, Korea, Singapore, Taiwan Province of China2. ASEAN-4 consists of Indonesia, Malaysia, Philippines and Thailand3. Real GDP growth for the first nine months of 2007 compared to the first nine months of 20064. Ministry of Finance estimates5. Assumed GDP growth based on Revised 2007 Budget

2

Economic growth is powered by non-oil & gas sectors and is expected to exceed growth projections for ASEAN-4 (1), newly industrialized Asia (2), and the world average

2005 FY: 5.68% 2006 FY: 5.48% 9 Months 2007 (3): 6.3%

(4) (5)

ASEAN-4: 5.6%World: 5.2%Newly Industrialized Asia: 4.9%

Solid Growth Supported by Strength in Consumption, Exports and InvestmentPrivate consumption growth has exceeded pre-crisis levels while investment growth is supported by favorable climate

Source: Ministry of Finance1. Preliminary2. Real growth for the first nine months of 2007 compared to the first nine months of 2006

3

Sources of Economic Growth

4.0%

17.1%

3.2% 2.9%

9.2%

4.9%

7.9%8.8%

6.6%

10.8%

16.4%

9.6%7.6%

4.7%

8.0%

0%

3%

6%

9%

12%

15%

18%

Private Consumption Government Consumption Investment Exports Imports

Growth

2005 2006 2007

Investment climate has been enhanced by the New Investment Law, which key features are:Equal treatment for both domestic and foreign investorsAbolishment of requirement for gradual divestment by foreign investorsExtension of validity of land titlesRight to appoint foreign managementProhibition of nationalization without indemnification at market valueUnrestricted repatriation of profits and capital

(1) (1) (2)

Growth Driven by Non-oil & Gas Sectors

Economic Growth by Major Sectors

4

Manufacturing is the single largest sector and growth outlook is supported byInfrastructure spending

Pro-industry policies

Double-digit growth in transportation and telecommunication supported by infrastructure development and consumption

3.7%4.3%

5.0%7.4%

12.2%

7.9%

0%

3%

6%

9%

12%

15%

Agriculture Mining & Quarrying Manufacturing Trading, Hotel,Restaurant

Transportation &Communications

Finance

2005 2006 2007

Sector as a % of GDP (3) 14.5% 8.8% 27.3% 17.0% 7.0% 9.3%

Growth is broad based but highlighted by strengths in infrastructure and telecom

(1) (1) (2)

Source: Ministry of Finance1. Preliminary2. Real growth for the first nine months of 2007 compared to the first nine months of 20063. Sector composition of GDP (at constant market prices) for the first nine months of 2007

Continued Growth in InvestmentContinued Growth in Investment

Quarterly Imports of Capital Goods

0

500

1,000

1,500

2,000

2,500

3,000

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q070%

10%

20%

30%

40%

50%

60%

Value of Imports % Growth (y-o-y)

% GrowthUS$ mn

Investment and Working Capital Credit GrowthGrowth (y-o-y)

Recovery in imported capital goods and steady increase in investment credit reflect increasing investment

5

64.5%84.5% 90.2%

0%

20%

40%

60%

80%

100%

2005 2006 2007

Realized Government Capital Expenditure% Realization

0%

5%

10%

15%

20%

25%

30%

35%

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

Investment Credit Working Capital Credit

Source: Ministry of Finance, Bank Indonesia1. Preliminary

(1)

Increasing Foreign InvestmentSignificant foreign portfolio inflows demonstrate resilience against the subprimemortgage crisis

Foreign Portfolio Investment

1,896

8,336

5,580

4,429

01,0002,0003,0004,0005,0006,0007,0008,0009,000

2004 2005 2006 2007

US$mn

6

Source: Bank Indonesia1. Preliminary2. For the first nine months of 2007

(2)(1)

19% growth in net FDI inflow in the first nine months of 2007 supported by:Increase in reinvested earnings

Establishment of the Batam, Bintan and Karimun SEZs

Increase in approvals for foreign investment applications

Creation of tax incentives

Significant growth of over 160% in foreign portfolio investmentKey components of FPI include purchases of government bonds and Bank Indonesia certificates

Inflows dropped substantially in the 3rd quarter following the subprime crisis but inflows in September recovered to levels consistent with the early part of the year

Foreign Direct Investment

4,0565,270

6,058

10,521

0

2,000

4,000

6,000

8,000

10,000

12,000

2004 2005 2006 2007

US$mn

(2)(1)

Improving External PositionImproving External PositionImproving Balance of Payments position with record high current account surplus, contributing to a significant increase in foreign currency reserves

Balance of Payments (1)

Source: Bank Indonesia1. Balance of Payments from 2004 onwards are based on the revised BOP reporting system2. For the first nine months of 20073. Preliminary

7

Foreign Currency ReservesUS$ bnMonths

5,030

3,655

309

9,189

444

14,510

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2002 2003 2004 2005 2006 2007

US$mn

Current Account Balance Capital and Financial AccountOverall Balance

32.036.3 36.3 34.7

42.6

57.0

6.6

7.1

5.5

4.0

4.5

5.7

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006 20070

10

20

30

40

50

60

International Reserves (RHS)

Months of Imports and Official Debt Repayment (LHS)

(2) (3)

Record High ExportsRecord High ExportsStrong growth in non-oil & gas exports following solid global demand and price increases in international commodities

Composition of Exports by Major Groups

8

Indonesian Export Price Index

50

100

150

200

250

300

2002 2003 2004 2005 2006 2007

Index

IDEXXPG Index (Non-oil & Gas)

IDEXPEGS Index (Oil & Gas)

59.264.1

70.8

87.0

103.5

86.2

0

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007

US$bn

Agricultural Products Mineral Products

Manufactured Products Crude Oil and Oil Products

LNG, LPG and Natural Gas Total

(2002 = 100)

Source: Bank Indonesia, Bloomberg1. Preliminary2. Exports for the first nine months of 2007

(2)(1)

Monetary Policy

Section 2

0.0%

0.4%

0.8%

1.2%

1.6%

J F M A M J J A S O N D J F M A M J J A S O N D0.0%

5.0%

10.0%

15.0%

20.0%

M-o-M (LHS) Y-o-Y (RHS)

Monetary Policy Designed to Achieve Monetary Policy Designed to Achieve Macroeconomic StabilityMacroeconomic StabilityBuilding macroeconomic stability through inflation targeting

Monetary Policy Strategy

9

Consistent implementation of inflation targeting

Maintain a prudent, measured course in monetary policy by careful monitoring of dynamics changes in the economy and coordination with the MOF

Foster macroeconomic stability by intervening to avoid excessive volatility in the exchange rate to support sustainable growth

Improve banking supervision and prudent regulation

Inflation

2007 Target: 6% ± 1%

2008 Target: 5% ± 1%

BI Rate Exchange Rate (USD/IDR)

2006 2007

8,6008,7008,8008,9009,0009,1009,2009,3009,4009,5009,600

J F M A M J J A S O N D J F M A M J J A S O N D

2006 2007

2006 Avg. Rate: Rp 9,164 2007 Avg. Rate: Rp 9,139

6%

7%

8%

9%

10%

11%

12%

13%

14%

J F M A M J J A S O N D J F M A M J J A S O N D

2006 2007

Source: Bank Indonesia

Prudent Regulations Bolster the Banking Sector Prudent Regulations Bolster the Banking Sector PerformancePerformance

Main Banking Indicators (%) Commercial Bank Earning Assets

Prudent Regulations Bolster the Banking Sector Performance

22.4%

19.4% 19.4% 19.3%

21.3%

20.7% 20.7%

20.0%

18%

19%

20%

21%

22%

23%

2002 2003 2004 2005 2006 1Q07 2Q07 3Q070.0%

3.0%

6.0%

9.0%

12.0%

15.0%

Average CAR Gross NPL Net NPL

Loans

BI Bills

Other Securities

Recap Bonds

Interbank

0

20

40

60

80

100

120

140

160

180

200

2002 2003 2004 2005 2006 1Q07 2Q07 3Q07

10

Source: Bank Indonesia

US$ bn

Fiscal Policy

Section 3

Resilience Against Higher Oil PricesResilience Against Higher Oil Prices

Effect of Oil Price on Budget, 2007

Oil Imports and Exports, 2007 Oil & Gas Imports and Exports, 2007

2.6

(3.5)

(0.9)

(4)

(3)

(2)

(1)

0

1

2

3US$ bn

Revenue Expenditure Deficit / Surplus

Assuming US$72/Bbl; compared to 2007 Budget assumption of US$60/Bbl

25.2

(18.1)

7.0

(30)

(20)

(10)

0

10

20

30US$ bn

Exports Imports Trade Balance

Historical and Futures Brent Oil Price Index

Negative

Surplus

No significant impact on 2007 budget, an additional US$0.9 bn deficit was incurred

11

30

40

50

60

70

80

90

100

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

US$/Bbl

Source: Ministry of Finance, Bloomberg

Brent futures contracts

Close as of Dec 31, 2007

13.0

(18.0)

(6.1)

(30)

(20)

(10)

0

10

20

30US$ bn

Exports Imports Trade Balance

Government Fuel Subsidies Remain an Issue

Electricity and Fuel Subsidies

Domestic fuel subsidies2007 fuel subsidy has grown 31% over 2006 due to:

Higher oil pricesHigher domestic oil consumption

Electricity subsidies2007 electricity subsidy has grown 21% due to:

Higher sales ( 6.8%), energy losses ( 9.75% 10.14%), and increased use of fuel to generate electricity ( 32%)Higher fuel consumption and fuel price

3.5

6.6 7.0

9.2

0.4 0.41.6

3.34.0

3.4

10.7

0.4

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007

US$ bn

Fuel Electricity

12

(1)

Source: Ministry of Finance1. Preliminary

Highlights

Fiscal Policy Fiscal Policy 2007 State Budget2007 State Budget

Key Assumptions

Targeted deficit at 1.5% of GDP, current realization of 1.1% of GDP

Tax ratio declined slightly from 13.1% to 13.0% of GDP

Spending on energy subsidies increased from 2.8% to 3.18% of GDP

Budget financing to rely more on domestic sources, primarily government debt

State Budget 2007 Outcome

Revised Budget Realization

GDP Growth (%) 6.3% 6.3%

Inflation (%) 6.00% 6.59%

Exchange Rate (US$/IDR) 9,050 9,139

3 Month SBI Rate (%) 8.0% 8.0%

Crude Oil Price (US$/Bbl) 60 72

Lifting (mn Bbl/day) 0.950 0.899

In US$ bn Revised RealizationTotal Revenues & Grants 76.7 77.9

Tax Revenues 54.4 53.8

Non-tax Revenues 21.9 23.9

Grants 0.4 0.2

Total Expenditures 83.1 82.6Central Government 55.0 54.9

Of which: Energy Subsidies 9.7 13.1

Transfer To Region 28.1 27.7

Overall Balance (Deficit) (6.4) (4.7)

In US$ bn Revised Realization

Domestic Financing 7.8 7.4

Domestic Bank Financing 1.2 1.0

Domestic Non-bank Financing 6.7 6.4

Privatization Proceeds and Asset Recovery 0.4 0.3

Government Bonds, Net 6.5 6.3

Infrastructure Support (0.2) (0.2)

Foreign Financing, Net (1.4) (2.6)Program Loans 2.1 2.2

Project Loans 2.6 1.6

Amortization (6.1) (6.4)

Total Financing 6.4 4.7

13

Source: Ministry of Finance

Fiscal prudence whilst maintaining strong growth and resilience to external factors

2008 State Budget2008 State Budget

Targets of 2008 Budget:To expand economic growth by increasing infrastructure expenditureTo lower Indonesia s total debt to 33% of GDP

Projected total Government revenue (including grants) of US$85.9 bnDeficit of US$8.1 bn expected to be financed mainly from domestic sources, primarily through issuance of domestic bonds

Infrastructure investment for job creation and acceleration of growth

Key Assumptions Budget Highlights

Official State Budget 2008

Official

GDP Growth (%) 6.8%

Inflation (%) 6.0%

Exchange Rate (US$/IDR) 9,100.0

3 Month SBI Rate (%) 7.5%

Crude Oil Price (US$/Bbl) 60.0

Crude Oil Production (mm Bbl/day) 1.034

In US$ bn Budget % of GDPTotal Revenues & Grants 85.9 18.1%

Tax Revenues (1) 65.1 13.7%

Non-tax Revenues 20.6 4.3%

Grants 0.2 0.0%

Total Expenditures 93.9 19.8%

Central Government 63.0 13.3%

Transfer To Region 30.9 6.5%

Overall Balance (Deficit) (8.1) (1.7%)

In US$ bn Budget % of GDP

Domestic Financing 9.9 2.1%

Domestic Bank Financing 0.03 0.0%

Domestic Non-bank Financing 9.9 2.1%

Privatization and Asset Recovery 0.2 0.0%

Government Bonds, Net 10.1 2.1%

Infrastructure Support (0.4) (0.1)%

Foreign Financing, Net (1.8) (0.4%)Program Loans 2.1 0.4%

Project Loans 2.6 0.6%

Amortization (6.6) (1.4%)

Total Financing 8.1 (1.7%)

14

Source: Ministry of Finance

Impact of Oil Price, Production & Consumption on Impact of Oil Price, Production & Consumption on the 2008 State Budget the 2008 State Budget

15

Sensitivity of Budget Deficit to Oil Prices

(US$/Bbl)

Source: Ministry of Finance

In US$ mn $90 $95 $100

Oil Revenue (Tax & Non-tax) +9,967 +11,835 +13,703

Expenditure (Subsidies & Transfers) +15,165 +17,429 +19,714

Deficit w/o Policy Measures (5,198) (5,593) (6,011)

Total Deficit as a % of 2008 GDP (2.8%) (2.9%) (3.0%)

Deficit w/ Policy Measures (22) (132) (286)

Total Deficit as a % of 2008 GDP (1.7%) (1.7%) (1.8%)

1. Usage of contingent fund in the Budget

2. Usage of unrealized expenditure in the Budget

3. Bond issuance to the oil producing (windfall) region

4. Prioritization of Government expenditures

5. Energy policy with regards to production and subsidy of oil and gas and power

6. Improvement in Pertamina and PLN efficiency

7. Tax revenue increase and dividends from SOEs

8. Additional bonds / Government securities issuance

9. Counter cyclical fiscal policy measures

9 Fiscal Policy Measures

Government is prepared to ensure fiscal prudence in the face of rising oil prices

Central Government RevenueCentral Government Revenue

16

Source: Ministry of Finance1. Preliminary2. Assumed based on state Budget 2008

Central Government Sources of Revenue

32.1

39.7

44.8

50.7

69.6

77.7

85.7

0

10

20

30

40

50

60

70

80

90

2002 2003 2004 2005 2006 2007 2008E

US$ bn

Tax Non-tax

Tax and Customs Reform

Historical and Projected Tax Ratio

11.3%

11.8%12.2%

12.7%12.3%

13.0%

13.6%

10%

11%

12%

13%

14%

2002 2003 2004 2005 2006 2007 2008E

% of GDP

Apply the new tax administration law

Improve tax and custom administration through modernization of tax offices

Improve tax compliance, tax audit and speed up VAT refund process

Provide tax and import duty incentives

Free Trade Agreements (FTA), Economic Partnership Agreements (EPA) and National Single Window (NSW)

(1)

(1) (2)

(2)

Central Government ExpenditureCentral Government ExpenditureCentral Government Expenditure by Function (1)

17

Source: Ministry of Finance Budget 20071 Beginning 2005, certain categories in Government expenditure have been reclassified. Current expenditures and development

expenditures have been merged.2 Preliminary3 Assumed based on state Budget 2008

Reallocation of Government Expenditure

34.6

44.047.6

52.5

73.3

82.6

94.1

0

10

20

30

40

50

60

70

80

90

100

2002 2003 2004 2005 2006 2007 2008E

US$ bn

Material Capital Interest Payments

Subsidies Transfers to Regions Others

Realization of Transfer to Regions

30.927.7

24.7

15.414.414.0

10.5

0

5

10

15

20

25

30

35

2002 2003 2004 2005 2006 2007 2008E

US$ bn

6.45.2 5.6 5.8

7.1

11.2

3.4 3.0

0

2

4

6

8

10

12

2005 2006 2007 2008E

US$ bn

Capital Expenditure Material Expenditure

(2)

(2) (3)

(2) (3)(3)

Commitment Towards PrivatizationCommitment Towards Privatization

Privatization Proceeds

18

Source: Ministry of Finance, State Budget 2004 to 20081 Preliminary2 Assumed based on state Budget 2008

0.020.0

215.7

295.4

0.043.7

0.0

259.5352.3

164.8

391.7

25.9 56.90.0

0

100

200

300

400

2004 2005 2006 2007 2008E

US$ mn

Gross Privatization Proceeds Government Equity Injection Net to Budget

(1) (2)

Up till 2005, privatization proceeds were wholly used as a source of budget deficit financing

Now, privatization is not just a source of budget deficit financing, but a means for improving corporate governance and is instrumental in disciplining the SOEs and improving their performance

From 2008, the government will no longer inject capital into SOEs in order to encourage SOEs to rely on independent financial resources and increase equity participation from the private sector

Privatization is one of the main themes in the roadmap for Indonesian SOEs

Government Debt Profile

Section 4

Effective Debt Management Strategy Effective Debt Management Strategy Indonesia practices a disciplined approach to sovereign debt management

Source: Ministry of Finance

19

Portfolio Management

Prudent RulesDomestic Bond

Market Development External Loan

Financing

Prioritise debt securities issuance in domestic market for deficit financing & debt refinancing

Diversify debt instruments to widen investor baseDevelop market infrastructure to support efficient price discovery mechanism

Meet Millennium Development Goals (MDGs), (E.g. poverty reduction)Finance cost recovery projectsEnhance project readiness criteria

Issue benchmark bonds on regular basis (E.g. 5, 7, 10, 15 and 20 years)Aggressively conduct debt switching to extend durationBuyback bonds to reduce outstanding debt and stabilize marketDiversify funding sources (e.g., Sukuk)

To minimize cost of debt within manageable risk

Objective

Effective Coordination amongst Fiscal, Monetary and Capital Market Authorities

Issuance of Government Securities to Fund the Issuance of Government Securities to Fund the DeficitDeficitGovernment securities are the major source of financing for the budget deficit, debt refinancing and infrastructure support

Budget Deficit Financing

Source: Ministry of Finance1. Preliminary2. Assumed based on Proposed State Budget 2008

0.8%

1.1%

1.6%

2.1%

0.5%

1.7%

0.9%

1.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2005 2006 2007 2008

Budget Deficit, % of GDP Government Securities - Net, % of GDP

% of GDP

(1) (2)

20

Effective Debt Management Effective Debt Management Indonesia s debt-to-GDP and debt service ratio is improving

Central Government Debt to GDP Ratio

Central Government Debt Service Ratio

26.1%26.8%33.2%

25.8%24.7%

34.8%

0%

10%

20%

30%

40%

2002 2003 2004 2005 2006 2007

62%

36%

32% 28% 24% 21% 19%

27%23%

18% 16%

55%

47%

39%

69%

36%

33%29%

0%

20%

40%

60%

80%

2002 2003 2004 2005 2006 2007

Total Debt to GDP Ratio Domestic Debt to GDP Ratio External Debt to GDP Ratio

Source: Ministry of Finance1. Preliminary2. Ratio of external debt as at September 30, 2006 over GDP for the period September 30, 2007 to September 30, 2007 21

% of Revenue

(1) (1) (2)

(1) (1)(1)

Composition of DebtComposition of Debt

Debt Composition, Sep 2007 By Currency, Sep 2007

54% 53% 50% 50% 53% 54%

46% 47% 50% 50% 47% 46%

0%

25%

50%

75%

100%

2002 2003 2004 2005 2006 2007E

Domestic Debt External Debt

IDR54% USD

17%

EUR7%

Others4%

GBP1%

JPY17%

By Maturity and Interest Rate, Sep 2007

In US$ bn Interest Type TotalTenor Fixed Variable Nominal %

Short term: up to 3 years 17,716 9,927 27,643 19.23%

Medium term: 4 to 10 years 30,062 12,898 42,960 29.89%

Long term: more than 10 years 56,002 17,127 73,129 50.88%

Total 103,779 39,953 143,732 100.00%

22

Debt is balanced between domestic and external sources with a majority of debt being either Rp denominated or long-dated

Source: Ministry of Finance

Holders of Government SecuritiesHolders of Government Securities

Holders of Domestic Government Securities

Source: Ministry of Finance

23

72% 75% 66% 59%

25%

17%

21%24%

3%

8%

13%

16%

28

33

38

43

48

53

Dec-04 Dec-05 Dec-06 Dec-07

Banks Non-Banks Foreign Holders

Composition of Foreign Holders of Government Securities by Maturity

0-2 yrs11%

>10 yrs42%

5-10 yrs25%

2-5 yrs22%

US$ bn

Total: US$8.3 bn

As of December 28, 2007

15.8%15.0%

15.7%

13.4%

14.9%15.3%14.3%14.0% 14.3%

7.6%

8.7%9.0%9.3%9.9%9.6%

7.7%8.4%8.6%

9.1%9.2%9.6%9.6% 10.0%10.5% 10.5% 10.7%

13.4%

10.4%10.2%10.1%10.0%9.9%9.8%

-

1

2

3

4

5

6

7

8

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028 .

2037

US$bn

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Dec 2001 eoy 2003 eoy 2005 28 Dec'07

Yield Curve as of 31 Aug'05 (RHS) Yield Curve as of 31 Dec '06 (RHS) Yield Curve as of 28Dec'07 (RHS)

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Yield

Maturity Profile of Tradable Domestic Government Maturity Profile of Tradable Domestic Government SecuritiesSecuritiesMaturity profile has been improving over time towards a more balanced structure

Source: Ministry of Finance

Unbalanced maturity profile at the end of 2001 had been restructured with re-profiling programs in Q4 2002 and Q1 2003

IndonesiaIndonesia s Credit Rating Historys Credit Rating HistoryPrudent government debt securities management helped the improvement of Indonesia s sovereign credit rating

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Source: Ministry of Finance

CCC-

CCC+

B

BB-

BB+

BBB

SD/DDD

R/C

CC

CCC

B-

B+

BB

BBB-

Ca

Caa2

B3

B1

Ba2

Baa3

Baa1BBB+

C

Caa3

Caa1

B2

Ba3

Ba1

Baa2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

S&P's Fitch's Moody's (RHS)

Credit Rating History

Oct 07 upgrade to Ba3 (stable) by

Moody s

Economic Crisis in 1998

Banks Recapitalization

Continuous fiscal adjustment, improving liquidity and

structural improvements in real economy

Diminished likelihood that the Government will seek

additional debt rescheduling

Gradually improving external liquidity,

macroeconomic stability and improved political

conditions

Sound record of fiscal management on the

success of Government efforts to improve the

investment climate

Final Remarks

Demonstrated resilience against the recent external shocks due to the sub-prime crisis and the escalating oil price

2007 budget deficit was 1.1% of GDP; lower than target of 1.5% of GDP

Higher macroeconomic growth expected by government based on continued strong household demand, an increase in exports and acceleration of investment in infrastructure projects

On track to achieve 6.3% GDP growth in 2007Assumed GDP growth of 6.8% in Budget 2008

In order to minimize the impact that higher oil prices have had on the fiscal deficit, the Government expects to maintain a prudent approach to fiscal policy

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