Economist says S&P assessment bolsters market confidence

Economist Esther Sri Astuti from the Institute for Development of Economics and Finance (INDEF) has responded positively to S&P Global Ratings’ assessment of Indonesia’s economic prospects and state-owned enterprise (BUMN) management, stating that international affirmation can enhance market confidence and credibility. “This affirmation opens greater opportunities for Indonesia to attract international liquidity,” Esther said in Jakarta on Thursday. She noted that S&P’s assessment aligns with the government’s policy direction through the establishment of Danantara Indonesia and PT Danantara Sumberdaya Indonesia (DSI). S&P Global Ratings has affirmed Indonesia’s sovereign rating at BBB, or investment grade, for long-term debt and A-2 for short-term debt, with a stable outlook. Esther said this BBB rating can serve as an entry point for institutional investors who have been bound by credit rating thresholds in determining their investment allocations. She added that the decision by rating agencies such as S&P, Fitch, and Moody’s to maintain investment grade ratings reflects an assessment of solid macroeconomic fundamentals and a country’s policy credibility. “In the Indonesian context, this S&P affirmation can act as a sentiment buffer when the rupiah and financial markets face pressure, while also helping to suppress currency volatility such as the rupiah in the foreign exchange market,” she said. Esther further noted that countries or companies with a BBB rating have the opportunity to issue bonds with more rational and attractive yields for large institutional investors. According to her, lower funding costs can expand financing space for both the government and corporations. However, she cautioned that these benefits still depend on market conditions and investor risk perception. Meanwhile, the BBB/A-2 affirmation with a stable outlook can also be seen as a form of support for the consolidation of BUMNs and the strengthening of natural resource governance being carried out by Danantara Indonesia. “The BBB rating opens the gateway to international liquidity,” she stressed. The assessment is underpinned by optimism over structural reforms being implemented by the government, including governance transformation and strengthening BUMN performance through Danantara Indonesia. The transformation efforts target streamlining the number of BUMNs from 1,077 companies to around 200-300, with 218 entities successfully consolidated as of June 2026 and projected direct efficiency gains of approximately Rp50 trillion. S&P’s report also explicitly highlighted the government’s move to centralise the management of the mineral and natural resources sector through PT Danantara Sumberdaya Indonesia (DSI) as an effort that could potentially close state revenue leakages, such as under-invoicing and transfer pricing, and drive long-term revenue and export earnings growth. Danantara Indonesia’s Chief Investment Officer, Pandu Sjahrir, emphasised that appreciation from international rating agencies is not the ultimate goal. He said the positive assessment from S&P should be used as a foundation to strengthen institutional performance, improve governance, and ensure that state investment management is conducted professionally and sustainably.