Analyst: Government Response to Rating Agencies Represents Swift Stabilisation Effort
Jakarta — An analyst of equity market political economy, Kusfiardi, has assessed that Indonesia’s government response to warnings from global rating agencies demonstrates a rapid stabilisation effort. However, according to him, the response still leaves questions regarding the credibility of long-term structural reforms.
“The government has responded relatively swiftly to rating agency warnings. However, that response is more of a defence of the existing macroeconomic fundamentals rather than a presentation of a truly new and measurable structural reform roadmap,” Kusfiardi stated as reported in Jakarta on Monday.
Kusfiardi assessed that the government’s swift response is important for maintaining market perception and preventing further downgrades. However, according to him, market participants continue to demand consistency in implementation and improved governance transparency.
“Markets do not evaluate only macroeconomic figures. They evaluate credibility, consistency and policy direction. If communication is merely reactive following rating warnings, space for uncertainty remains open,” said Kusfiardi.
He stated that several analysts view Moody’s negative outlook as a warning signal regarding Indonesia’s medium-term fiscal risks.
“Global investors are observing the coming 12-18 months as a crucial phase for testing policy credibility,” Kusfiardi stated.
Additionally, he continued, downward revisions of Indonesian equity recommendations by several international investment banks, as well as capital outflows occurring since the beginning of 2026, reflect market caution.
“The potential review of the MSCI index also becomes a factor that increases volatility,” said Kusfiardi.
In this context, he assessed that the character of policy deemed normative—following conventional fiscal management standards without significant structural breakthroughs—is seen as insufficient to meet the ambitious growth target of 8 per cent by 2029.
According to Kusfiardi, the uncertainty arising from market participants’ perception creates space for short-term speculation.
“In conditions of policy transition and rating uncertainty, global market participants—including hedge funds and institutional investors—tend to exploit volatility for short-term gain strategies. This is not an anomaly but a rational market mechanism in ambiguous situations,” said Kusfiardi.
Kusfiardi stated that speculation can occur in equities, government bonds or the rupiah exchange rate, particularly if the reform narrative is not communicated comprehensively and consistently.
He continued that this phenomenon is not solely a consequence of external factors but reflects the need for more proactive and long-term policy design.
“To reduce speculative risk and strengthen Indonesia’s bargaining position with global investors, improvements in fiscal transparency and governance are required, including clarity on the operational design of the sovereign wealth fund,” said Kusfiardi.
He mentioned the need for a measurable structural reform roadmap rather than merely an affirmation of macroeconomic stability, and consistent and data-based policy communication to prevent different interpretations in the global market.
“Short-term stability can be achieved through intervention and communication. However, long-term credibility can only be built through consistent and measurable structural reforms,” said Kusfiardi.
As the schedule for further rating reviews approaches in the coming months, market participants will continue to test how far the government can transform its defensive response into a more systemic reform strategy.
As is known, in recent weeks, the government has provided clarification and policy affirmations following warnings from S&P Global Ratings, Moody’s Ratings and MSCI Inc.
The government emphasised that national economic fundamentals remain strong, fiscal deficits are controlled, and economic growth shows acceleration.
Through various forums, including the “Indonesia Economic Outlook” agenda in February 2026, the government affirmed its commitment to keeping the deficit below 3 per cent of GDP, improving capital market structure through increased free float, and strengthening the role of the Danantara Indonesia Sovereign Wealth Fund.