Fitch Highlights MBG and Budget Deficit Issues; Finance Minister Purbaya Responds

Finance Minister Purbaya Yudhi Sadewa has finally responded to Fitch Ratings, the international credit rating agency that downgraded Indonesia’s sovereign debt outlook from stable to negative.

Purbaya suggested that the outlook downgrade may be attributed to the new administration and his recent appointment as Finance Minister. He expressed that the foreign agency may lack a complete understanding of his capabilities, given that he has not yet travelled abroad, including visits to meet Indonesian investors overseas.

“Perhaps because we still have a new government and a new Finance Minister, they might worry that the Finance Minister cannot do the calculations. So this is also my fault because I have never travelled abroad,” Purbaya stated during a press conference at his office in Central Jakarta on Monday (9 March 2026).

Previously, he had pledged not to leave Indonesia until the economy achieves 6% growth. However, following Fitch’s assessment, he recognised that he must promote Indonesia more actively.

“Initially, I thought I would not travel abroad before Indonesia reaches 6% growth. But now this must change because I also need to market our situation,” he added.

He confirmed plans to travel abroad in April 2026 to demonstrate the Finance Minister’s competence. He intends to attend the IMF-World Bank meetings in Washington DC, United States.

“So in April I will travel abroad to ensure that our Finance Minister understands what work is being done,” Purbaya stated emphatically.

In his remarks, Purbaya specifically addressed the Free Nutritious Meal (MBG) programme, which Fitch highlighted in its report released on 4 March 2026.

He assessed the MBG as an excellent programme being implemented by the current government. If citizens receive the MBG effectively and optimally, he is confident that students receiving it could achieve heights of up to 185 centimetres, like himself.

“If everyone receives a good, optimal MBG, surely people will be as tall as I am,” he said.

He also noted that the MBG is a new programme and therefore cannot be expected to run 100% smoothly. He emphasised that what matters most is the determination to improve the programme, something the government continues to pursue.

Regarding the structural weaknesses in Indonesia’s State Budget (APBN), Purbaya expressed confusion about Fitch’s assessment. Indonesia’s debt ratio remains safe, and the country’s economic growth is among the highest among G20 nations.

“If we look at the debt-to-GDP ratio, we are safe. If we look at the deficit-to-GDP ratio, we are safe. Our economic growth is even the highest in the G20. Countries around us, Thailand has growth below ours, its deficit is above 4%. Vietnam is above 4%, so why is Indonesia being targeted,” Purbaya questioned.

Fitch Ratings has announced a revision of Indonesia’s outlook on its Long-Term Foreign-Currency Issuer Default Rating from stable to negative. However, Indonesia’s debt rating itself remains BBB, classified as investment grade.

Nevertheless, Fitch emphasised that this outlook revision reflects increasing policy uncertainty and erosion of consistency and credibility in Indonesia’s policy mix amid growing centralisation of policy-making authority.

“This could weaken medium-term fiscal prospects, damage investor sentiment, and create pressure on external reserves,” according to an official statement on Wednesday (4 March 2026).

In its assessment, Fitch cited the Prabowo Subianto administration’s focus on achieving an ambitious 8% growth target and increasing social spending as key factors. Fitch views this focus as potentially leading to a much looser combination of fiscal and monetary policy, thereby creating risks to macroeconomic and financial stability.

Fitch illustrates this increasing risk through the government and parliament’s draft revision of the State Finance Law in the 2026 Priority Legislative Agenda. Through this revision, Fitch suggests there is a possibility that the deficit ceiling may be loosened from the consistent 3% of GDP threshold.

“This could weaken policy credibility and the ability to finance higher fiscal deficits without support from the central bank,” Fitch stated in its assessment.