Economists Urge Government to Heed Indonesia's Debt Outlook Downgrade
Head Economist of Bank Permata Josua Pardede has urged the government to pay close attention to Indonesia’s debt outlook downgrade by global credit rating agency Fitch Ratings, despite the agency maintaining Indonesia’s BBB credit rating. “This is certainly a cautionary signal for the government,” Pardede said in Jakarta on Thursday, 12 March 2026.
Although the outlook downgrade was directed at state-owned banks, Pardede noted that corporate ratings would be affected by this revision. Furthermore, the outlook downgrade will impact the cost of funding and influence sentiment in both the financial and capital markets.
Pardede stated that Indonesia’s negative outlook reflects global rating agencies’ concerns about the country’s fiscal condition. He noted that although February’s budget deficit remained controlled at 0.53 per cent, the government must improve the quality of tax revenue collection.
The goal is for the government to maintain adequate fiscal space amid global uncertainties. “To maintain stronger domestic economic growth,” he said.
The Ministry of Finance responded to the assessment by Fitch Ratings, which downgraded Indonesia’s debt outlook projection from stable to negative on Wednesday, 4 March 2026. The assessment followed Fitch’s appraisal process through a series of visits on 23–26 February 2026 in Jakarta.
The Ministry of Finance stated that Fitch adjusted the outlook from stable to negative based on several observations. Fitch will restore Indonesia’s outlook to stable if macroeconomic stability is achieved through consistent policy discipline.
“Indonesia remains on a positive path to strengthen growth and medium-term economic resilience,” said Deni Sujantoro, Head of Communications and Information Services Bureau at the Ministry of Finance, in an official statement on Wednesday, 4 March 2026.
Sujantoro stated that the Indonesian Government remains committed to maintaining macroeconomic stability and continuing fiscal discipline, as mandated by law.
Other commitments to be undertaken include improving the business climate through debottlenecking and deregulation measures to increase investment and economic growth, whilst strengthening structural reforms to enhance economic resilience.
According to Sujantoro, the government will continue to strengthen cross-sectoral coordination and fiscal-monetary policy coordination. Coordination is also being conducted across ministries and agencies, including with the Danantara State-Owned Enterprise Investment Fund.
The governance and operations of Danantara will maintain its credibility with measurable risks. “So that Danantara becomes a credible strategic investment instrument, well-managed and aligned with long-term macrofiscal stability,” said Sujantoro.
Despite the outlook downgrade, Indonesia’s actual debt rating from Fitch remains BBB. Fitch also provided an additional positive assessment on the macroeconomic aspect (Qualitative Overlay +1 notch). According to the Ministry of Finance, this positive assessment is supported by Indonesia’s projected growth of approximately 5 per cent in 2026–2027. Additionally, the assessment is based on the government debt-to-GDP ratio projected at approximately 41 per cent.
The Fitch Ratings assessment was conducted after the agency held assessments and discussions with several ministries and agencies, including the Coordinating Ministry for Economic Affairs, the Ministry of Finance, Bank Indonesia, the State-Owned Enterprises Management Agency, the Financial Services Authority, Danantara, and the Ministry of Investment and Industry/Indonesia Investment Coordinating Board.
Fitch Ratings is the second rating agency to downgrade Indonesia’s debt outlook this year. In February 2026, global rating agency Moody’s also downgraded Indonesia’s debt outlook to negative.