Fitch Ratings cuts Indonesia's debt outlook to negative

Fitch Ratings, the global credit rating agency, has cut Indonesia’s debt outlook from stable to negative on Wednesday, 4 March 2026. However, Fitch has kept Indonesia’s rating at BBB, or investment grade.

‘This revision of the outlook reflects rising policy uncertainty and concerns about the erosion of consistency and credibility of Indonesia’s policy mix amid increasing centralisation of policymaking authority,’ Fitch said in a statement on Wednesday, 4 March 2026. According to Fitch, this could undermine medium-term fiscal prospects, weaken investor sentiment, and place pressure on external buffers.

In its assessment, Fitch highlights the 8 per cent economic growth target that could lead to looser fiscal and monetary policy mix. This is seen as potentially creating risks to macroeconomic and financial stability. Fitch projects a 2026 budget deficit of 2.9 per cent of GDP.

Fitch also notes government social programmes, such as the Free Nutritious Meals (MBG), will consume a large share of funds. On the one hand, Fitch forecasts government revenue will be only 13.3 per cent of GDP in 2026 and 2027, amid a lack of measures to mobilise significant revenue.

Fitch also highlights Danantara, which has a mandate to improve the efficiency of state-owned enterprises (BUMN) and support growth through commercial investments. Danantara plans to invest USD 26 billion this year in downstream projects.

‘The uncertainty remains as to whether the mandate of the fund can be extended over time to cover quasi-fiscal activities through investments used to support government policy priorities, which could reduce fiscal transparency, policy consistency, and increase the risk of contingent liabilities for the state,’ Fitch writes.

Fitch’s cut to the debt outlook follows a similar decision by Moody’s on 5 February 2026. Last month, Moody’s downgraded Indonesia’s outlook from stable to negative. In its official statement, Moody’s said the change in outlook was driven by policy uncertainty that risks undermining effectiveness and signalling weaker governance.