Fitch Lowers Indonesia’s Debt Outlook as Government Revenue Strengthening Becomes a Priority

Coordinating Minister for Economic Affairs Airlangga Hartarto said the government would strengthen government revenue. The move comes in response to the global ratings agency Fitch Ratings lowering Indonesia’s debt outlook to negative on Wednesday, 4 March 2026.

Airlangga described the downgrade as a warning: ‘This is to remind Indonesia what we must learn going forward. There are, of course, things we see that need strengthening, particularly in terms of government revenue. The government understands this,’ he said at Menara Batavia, Jakarta, on Thursday, 5 March 2026.

One of the steps being taken is to strengthen the Coretax system through the Ministry of Finance. ‘We will continue to oversee Coretax so that our tax ratio can be increased,’ he said.

The former Minister of Industry noted that Indonesia’s economy is not only affected by the downgrade in outlook but also by the war currently taking place in the Middle East. He remained optimistic because, although the outlook has fallen, the country’s debt rating remains at BBB, i.e., investment grade.

The international debt rating agency Fitch Ratings lowered Indonesia’s debt outlook from stable to negative on Wednesday, 4 March 2026. The assessment followed Fitch’s review process after a series of visits to Jakarta from 23–26 February 2026.

The downgrade reason includes concerns over policy uncertainty in Indonesia and a state budget deficit above target. Fitch expects cautious policy will be maintained, including adherence to the 3 percent fiscal deficit limit.

However, a heightened focus on achieving an ambitious growth target of 8 percent and increased social spending could lead to a looser mix of fiscal and monetary policy, thereby creating risks to macroeconomic and financial stability. The agency also highlighted a range of policies, from free nutritious meals (MBG) to the formation of Danantara.

Fitch has become the second debt rating agency this year to trim Indonesia’s debt outlook. In February 2026, global rating agency Moody’s also lowered Indonesia’s debt outlook to negative.