BI Says Fitch's Negative Outlook Doesn't Signal Weak Fundamentals
BI Says Fitch’s Negative Outlook Doesn’t Signal Weak Fundamentals
Jakarta. Bank Indonesia says Fitch Ratings’ decision to revise Indonesia’s sovereign outlook to negative does not reflect weakening economic fundamentals, as growth, inflation, and external buffers remain solid.
Fitch on Wednesday revised Indonesia’s outlook to negative from stable while affirming its BBB investment-grade rating, citing rising policy uncertainty and concerns over the credibility and consistency of economic policymaking.
In a statement, Bank Indonesia Governor Perry Warjiyo said the affirmation of the BBB rating demonstrates continued global confidence in Indonesia’s macroeconomic stability.
“The affirmation of Indonesia’s BBB rating reflects global trust in the country’s strong economic fundamentals,” Perry said on Thursday.
He said domestic economic performance remains solid, with growth sustained and inflation under control, including low core inflation. The rupiah’s stability, he added, continues to be reinforced through stabilization measures in the offshore non-deliverable forward (NDF) market as well as spot and domestic NDF transactions.
Financial system stability also remains intact, supported by ample liquidity, high banking capital ratios and relatively low credit risk, Perry said. He added that the expansion of payment system digitalization and a healthy industrial structure are helping underpin sustainable economic growth.
In its report, Fitch said the outlook revision reflects growing risks stemming from increasingly centralized decision-making and uncertainty over Indonesia’s policy direction. The agency warned that these factors could weaken the country’s medium-term fiscal outlook, undermine investor confidence and add pressure to external resilience.
Despite the revised outlook, Fitch maintained Indonesia’s BBB rating, citing its track record of macroeconomic stability, solid medium-term growth prospects, relatively low government debt-to-GDP ratio and moderate external resilience. However, the agency cautioned that these strengths are increasingly constrained by declining state revenues, rising interest payment burdens, and governance indicators that lag behind peers with similar ratings.
Bank Indonesia projects economic growth in 2026 to range between 4.9% and 5.7%, with an acceleration expected in 2027, while inflation is forecast to remain within the target range.
External resilience also remains strong, Perry said, as reflected in a healthy balance of payments and solid trade performance. Indonesia’s foreign exchange reserves stood at $154.6 billion at the end of January 2026, equivalent to 6.3 months of imports or 6.1 months of imports and government external debt servicing — well above the international adequacy standard of around three months of imports.
The current account deficit in 2026 is projected to remain low at between 0.1% and 0.9% of gross domestic product.
Looking ahead, Bank Indonesia said it will continue to strengthen its policy mix to safeguard macroeconomic and financial system stability. The measures will be carried out in close coordination with the Financial System Stability Committee and the government to maintain market confidence amid global uncertainty.
Earlier, Moody’s Ratings also revised Indonesia’s outlook to negative from stable, citing investor concerns over policy credibility that have contributed to volatility in the stock market and the rupiah.
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