IHSG Closes Down to 7,000 Due to Budget Deficit Concerns

Indonesia’s Composite Stock Index (IHSG) on the Indonesia Stock Exchange (IDX) closed in negative territory on Monday, 16 March 2026, as market participants grew anxious about national fiscal stability and the potential for budget deficits to exceed the safe threshold of 3 percent of Gross Domestic Product (GDP).

The IHSG closed down 114.92 points, or 1.61 percent, to 7,022.29. Meanwhile, the LQ45 index, which tracks 45 leading shares, also declined by 14.60 points, or 2.01 percent, to 713.72.

Rully Arya Wisnubroto, Head of Research and Chief Economist at Mirae Asset Securities, explained that investors’ primary focus is maintaining fiscal discipline. The potential widening of the budget deficit has prompted global rating agencies to downgrade Indonesia’s outlook.

“Investors currently hope to keep the deficit below 3 percent. The rating outlook significantly impacts yields on government securities, which is a key variable influencing share valuations,” said Rully in Jakarta on Monday, 16 March.

Tensions between the United States and Iran have emerged as a major external factor weighing on markets. Trading data shows West Texas Intermediate (WTI) crude oil trading at US$97.80 per barrel, whilst Brent crude reached US$104.82 per barrel. These figures are substantially above the assumed price for Indonesian crude oil (ICP) in the 2026 state budget, set at US$70 per barrel.

This situation is compelling the government to consider issuing a Government Regulation in Lieu of Law (Perppu) to address ballooning energy subsidies and widening budget deficits.

Based on the IDX Sector Index, nine sectors recorded losses, led by the property sector, which fell 2.33 percent. The energy and raw materials sectors followed with declines of 2.29 percent and 1.66 percent respectively.

This week, investors will continue to monitor the direction of central bank monetary policy. The Federal Reserve will announce its Federal Open Market Committee results on Wednesday, 17 March, whilst Bank Indonesia will present its Board of Governors meeting results on Tuesday, 17 March concerning the direction of the benchmark interest rate.