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Indonesia's Debt Rating Holds Firm Despite Latest Terror Attack - 2003-08-11

The international credit rating agency Standard and Poor's will not downgrade Indonesia's sovereign debt rating, despite last week's deadly bombing at the Marriott Hotel in Jakarta.

S&P says the risk of a terror attack had already been factored in to its latest rating of the country. But S&P executives say they may downgrade Indonesia's rating if another attack takes place.

The International Monetary Fund has praised the progress made by the Indonesian government in reforming its economy in the first half of the year. A senior IMF advisor says inflation is continuing to decline; and growth, although slow, is picking up.

Indonesian President Megawati Sukarnoputri is forecasting the economy is expected to expand at just over three and a half percent this year. Reported inflation in July was slowed to just under 5.8 percent.

Indonesia is not renewing the IMF's $5 billion loan program when it finishes at the end of this year.

In Sydney, Australia, the latest housing figures show the city is getting very expensive, very fast. Skyrocketing home prices are increasingly freezing out salary earners and young professionals from buying property in the city.

Real estate agent Matt Clifton told the Australian Broadcasting Corporation that the rise in home prices is inspiring many to flee the city.

"In the last six months, we've seen an increase of up to 30 percent in residential housing prices," he said. "Land has increased up to 80, even 90 percent in recent times, which is quite phenomenal."

Meanwhile, the effects of Severe Acute Respiratory Syndrome, or SARS, are still being felt in Hong Kong. Cathay Pacific Airways posted a record net loss this week for the first half of the year. The Hong Kong-based airline says it lost $159 million due to a drastic decline in passenger demand because of Asia's SARS outbreak earlier in the year.

Cathay Pacific's parent company, Swire Pacific, was also hit hard. Swire's net profit dropped 56 percent in the six months to June. Swire owns nearly 46 percent of Cathay and derives a significant portion of its earnings from the airline.