BI: Fitch's negative outlook is believed not to reflect fundamental weaknesses in Indonesia's economy

Jakarta (ANTARA) - Bank Indonesia (BI) says that the adjustment of Indonesia’s sovereign credit rating outlook from Fitch Ratings to negative is believed not to reflect a weakening of Indonesia’s fundamental economy. Governor Perry Warjiyo, in a briefing in Jakarta on Wednesday, said that Indonesia’s economic prospects remain solid and resilient. The strength of the economy is reflected in domestic economic growth that remains solid amid rising global uncertainty. In addition, inflation remains under control, including core inflation, and the rupiah continues to strengthen through exchange rate stabilisation policies in offshore non-deliverable forwards (NDF) and in domestic spot and DNDF markets. Perry noted that financial system stability remains well maintained, underpinned by adequate liquidity, high banking capitalisation, and low credit risk. Moreover, the expansion of digital payments infrastructure, supported by stable infrastructure, and a healthy industrial structure also support growth. It should be noted that the outlook revision is influenced by Fitch’s view of increasing policy uncertainty and concerns about the consistency and credibility of Indonesia’s policies. Although the outlook was adjusted, Fitch in its report maintained Indonesia’s sovereign credit rating at BBB. Fitch states that the rating affirmation reflects global confidence in Indonesia’s macroeconomic stability with solid medium-term growth prospects, a relatively low government debt-to-GDP ratio, and adequate external resilience. “The rating affirmation at BBB reflects global confidence in Indonesia’s fundamentals, which remain strong,” said Perry. BI projects that Indonesia’s medium-term growth prospects remain solid and are expected to rise, with inflation kept within target. In 2026, economic growth is forecast to be in the range of 4.9-5.7 percent and to rise in 2027, with inflation staying within the target. Indonesia’s external resilience remains strong amid global turbulence, with the Balance of Payments (BoP) healthy and supported by solid trade performance. Indonesia’s foreign exchange reserves at end-January 2026 stood at 154.6 billion USD, equal to financing 6.3 months of imports or 6.1 months of imports and payments of government external debt, and above the international adequacy standard of around 3 months of imports. The BoP in 2026 is expected to remain solid with a current account deficit in the range of 0.9-0.1 percent of GDP. BI will continue to strengthen the policy mix to maintain macroeconomic and financial stability and to support sustainable economic growth amid rising global uncertainty. This will be done in close synergy with the Financial System Stability Committee (KSSK) and the Government’s Asta Cita Programme, and through ongoing coordination with the Government to strengthen policy communication to maintain market confidence.