Fitch scrutinises Danantara and MBG, Airlangga defends

Jakarta — The existence of Danantara and the Free Nutritious Meal Programme (MBG) has also come under scrutiny in the latest Fitch Ratings report, which revised Indonesia’s debt outlook to negative. The rating agency notes that the establishment of the sovereign wealth fund leaves several uncertainties, particularly regarding its investment mandate and implications for the state’s fiscal position. Coordinating Minister for Economic Affairs Airlangga Hartarto said Danantara is indeed a relatively new institution and therefore not widely known by global market participants.

“Danantara is a new sovereign wealth fund organisation. Of course not everyone knows it yet,” Airlangga said in Jakarta on Thursday (5/3/2026).

According to him, the investment body needs time to build a track record so as to boost market confidence. “A track record is needed. Therefore, that is a note of attention,” he added. Airlangga added that the efforts to introduce and strengthen the credibility of the institution will be the responsibility of Danantara’s management. “Efforts, of course, are handed to Danantara,” he said.

In its report, Fitch assessed that the investment fund could potentially become a vehicle to push downstreaming projects and strategic sectors. However, the rating agency also warned of the need for a clear mandate to avoid creating additional fiscal risk outside the government budget.

Airlangga also noted that the global economy today is affected by geopolitical tensions. That, in his view, also affects the economic prospects of many countries. “The global economy is affected not only by Fitch but also by war,” Airlangga said.

Although the outlook was downgraded, Fitch kept Indonesia’s debt rating at BBB, still in the investment-grade category.

Meanwhile, the Free Nutritious Meal Programme (MBG) features as one of Fitch’s notes in its latest report, which revised Indonesia’s debt outlook to negative from previously stable. The rating agency notes that increased social spending, including the programme, could put pressure on the government’s fiscal space.

For that reason, Airlangga assessed the MBG programme as a long-term investment that can deliver economic and social benefits for Indonesia. According to Airlangga, several international studies show that a nutrition programme for the population can yield greater economic benefits in the future.

“MBG, if implemented well and massively, as per some World Bank or Rockefeller Foundation studies, for every one dollar invested you can get seven dollars back. So it is an investment and many countries do it,” Airlangga said.

He added that the programme has also been implemented in various countries, including the United States, as part of human resource development investment.

“This is a long-term and medium-term challenge that we cannot remove the long term just for the short term,” he added.

In its report, Fitch estimates Indonesia’s 2026 fiscal deficit at around 2.9 percent of GDP. The budget pressure is, among other things, driven by higher government spending, including the MBG programme, which is projected to reach around 1.3 percent of GDP.

Despite the downgrade, Fitch kept Indonesia’s debt rating at BBB, still in the investment-grade category. The agency noted that Indonesia’s macroeconomic stability remains relatively intact, with a moderate government debt ratio and a still-strong growth outlook.