Airlangga Speaks on Fitch's Cut to Indonesia's Debt Rating Outlook

Jakarta, CNBC Indonesia - Coordinating Minister for Economic Affairs Airlangga Hartarto has spoken about Fitch Ratings’ release concerning Indonesia’s debt. The global rating agency Fitch Ratings indeed cut the outlook for Indonesia’s debt to negative from previously stable, although the rating level remains at BBB and within the investment-grade category. This means that Indonesia’s debt position is still considered investable.

In its assessment, Fitch says the changed outlook reflects rising policy uncertainty and a declining consistency and credibility of Indonesia’s policy mix. Fitch also highlights risks from policy loosening that is too aggressive amid high economic growth ambitions, potential fiscal pressure, investor sentiment, and external reserves.

Airlangga emphasised that the warning from Fitch will be studied further by the government. Regarding the revenue concerns Fitch flagged, Airlangga said the government understands them. “That is to remind Indonesia what we must learn going forward. And of course, several things we see need to be strengthened include revenue. The government already understands that,” he said.

Therefore, the government is pushing ahead with the implementation of the Core Tax System at the Ministry of Finance. This will be monitored to raise Indonesia’s tax-to-GDP ratio.

Fitch projects a fiscal deficit of 2.9% of GDP in 2026, unchanged from 2025 and above the government’s target of 2.7%. This is driven by moderate state revenue, notably tax revenue.

Regarding MBG, Airlangga stressed that the government has not yet evaluated the Free Nutritious Meals (MBG) programme. The programme is ongoing; “So if it’s running, we will roll it out,” he said. He also noted that studies by the World Bank and the Rockefeller Foundation view the programme as resilient and impactful on the economy. The Rockefeller Institute, which studies the programme, estimates that every MBG investment of US$1 could generate up to US$7 in economic impact.

“So this is an investment, and many countries do this, even the United States; thus this is a long-term and medium-term challenge that cannot be resolved by sacrificing the long term for the short term,” he said.

In its report, Fitch highlights the burden of the fiscal deficit worsened by the potential for large government spending on social expenditures, including the MBG (totaling 1.3% of GDP for 2025-2029).

“The plan to accelerate spending in the first half of 2026 could add to the risk of fiscal deviation,” Fitch said.