Indonesia Welcomes S&P's Investment-Grade Rating Affirmation
Indonesia Welcomes S&P’s Investment-Grade Rating Affirmation
Jakarta. Indonesia on Monday welcomed S&P Global Ratings’ decision to reaffirm the country’s investment-grade sovereign credit rating, saying the assessment reflects confidence in the government’s economic policies and the resilience of Southeast Asia’s largest economy.
S&P maintained Indonesia’s long-term foreign currency sovereign credit rating at BBB and its short-term rating at A-2, both with a stable outlook.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the reaffirmation underscored the credibility of the government’s economic management despite heightened geopolitical tensions, volatile commodity prices, and tighter global financial conditions.
“S&P’s affirmation of Indonesia’s BBB rating with a stable outlook recognizes the consistency and credibility of the government’s economic policies,” Airlangga said in Jakarta.
According to S&P, Indonesia’s rating is supported by solid economic growth prospects, prudent macroeconomic management, and relatively low external and government debt compared with peer economies.
The ratings agency expects Indonesia’s economy to expand by around 5% annually over the next two to three years, forecasting 5.1% growth in 2026 and an average of 4.9% between 2026 and 2029. Indonesia’s 5.6% year-on-year economic growth in the first quarter of 2026, driven by government spending and accelerated budget disbursement, also supported the assessment. S&P projects Indonesia’s GDP per capita to reach about $5,200 in 2026.
A key factor behind the stable outlook is the government’s commitment to keeping the fiscal deficit below 3% of gross domestic product (GDP), in line with statutory limits. S&P said Indonesia’s consistent adherence to the fiscal rule has been an important pillar supporting its credit profile.
The agency also cited improving government revenue, which rose 19% in the first five months of 2026 from a year earlier, supported by stronger tax administration, higher value-added tax collections, and increased royalties and dividends from the natural resources sector.
“Despite growing global uncertainty, Indonesia has maintained economic growth of around 5%, preserved fiscal discipline with a budget deficit below 3% of GDP, and strengthened governance in the natural resources sector. This sends a positive signal to investors that Indonesia’s economic fundamentals remain solid,” Airlangga said.
He added that the government would continue improving policy consistency and predictability while advancing downstream industrialization, strengthening governance of export proceeds, and boosting productivity to support future rating upgrades.
In a separate statement, Bank Mandiri Chief Economist Andry Asmoro said S&P’s decision should provide a positive boost to Indonesia’s bond market by reducing the risk of a deterioration in global investor sentiment toward the country’s sovereign debt.
However, he said the impact on the rupiah and equities is likely to be limited, as investors remain focused on capital flows, external-sector pressures, and the consistency of domestic policy implementation.
“Indonesia’s challenges have shifted from economic fundamentals to policy credibility and external resilience. As long as fiscal discipline is maintained, the risk of a downgrade remains relatively low,” Andry said.
He added that the rupiah’s performance, Indonesia’s credit default swap spreads, foreign portfolio flows, and the current account balance would remain key indicators influencing future rating decisions.
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