BI: Fitch's Outlook Downgrade Does Not Reflect Weakening of Indonesia's Economic Fundamentals

Jakarta – Bank Indonesia (BI) believes that Fitch Ratings’ downgrade of Indonesia’s credit rating outlook does not mean that Indonesia’s economic fundamentals have weakened. Fitch Ratings lowered the Long-Term Foreign-Currency Issuer Default Rating (IDR) outlook to negative from stable, while maintaining the sovereign rating at BBB. Governor Perry Warjiyo said the decision reflects global confidence in Indonesia’s solid fundamentals. He noted that Indonesia’s economic strength is reflected in domestic growth that remains solid amid rising global uncertainty, inflation that remains under control, and a rupiah that continues to strengthen through market interventions both domestically and abroad. Financial system stability also remains well maintained, underpinned by adequate liquidity, banking capital at elevated levels, and low credit risk. ‘The digitisation of payment systems, underpinned by stable infrastructure and a healthy industrial structure, also supports economic growth,’ he added. In its report, Fitch stated that the affirmation of Indonesia’s BBB rating reflects Indonesia’s track record of maintaining macroeconomic stability with solid medium-term growth prospects, a relatively low government debt-to-GDP ratio, and adequate external resilience. On the other hand, the outlook revision was influenced by Fitch’s view of increasing policy uncertainty and concerns about consistency and credibility of Indonesia’s policy. Looking ahead, the central bank expects the medium-term growth prospects for Indonesia to remain solid and to rise, supported by contained inflation. This year BI projects growth in the range of 4.9-5.7 percent and it is expected to rise in 2027, with inflation staying within the target band. Indonesia’s external resilience remains strong amid global turbulence, with the Balance of Payments (NPI) healthy and supported by solid trade balance performance. Indonesia’s foreign exchange reserves at end-January 2026 remained high at USD 154.6 billion, equivalent to financing 6.3 months of imports or 6.1 months of imports and government external debt service, and above the international adequacy standard of around 3 months of imports. The BoP is expected to remain favourable this year with a current account deficit in the range of 0.9-0.1 percent of GDP. ‘BI, to maintain macroeconomic and financial system stability and to promote sustainable economic growth amid growing global uncertainty, collaborates closely with the Financial System Stability Committee (KSSK) and government’s Asta Cita programme, and continues to coordinate with the government to strengthen policy communication to maintain market confidence,’ he said.