Purbaya vs S&P Analysis on Indonesia's Debt

Jakarta, CNBC Indonesia - Finance Minister Purbaya Yudhi Sadewa warned against taking foreign economists’ calculations about Indonesia at face value. He said this when answering questions on fiscal resilience, particularly the indicator of interest payments on debt to revenue, at the APBN Kita press conference on Tuesday (19 May 2026).

“The way economists abroad calculate it is, what is our income, what is our interest payment. They divide interest payment by general income. That’s how they calculate it. So you should not trust the economists from outside. If you don’t understand the methodology used by S&P,” he said.

The minister disclosed that S&P currently projects Indonesia’s debt service ratio to revenue at 14.3%. This means it is slightly below the safe threshold of 15%. He also said he remains optimistic that the ratio will improve as state revenue growth remains consistent.

“S&P, the rating agency, initially questioned that; they now predict this year that we will be at 14.34 percent, whereas the threshold is 15 percent. So our condition is safe. The only thing we must ensure is that our income is truly as targeted,” he said.

“I’m confident that they use the APBN to calculate. It seems our revenue is better than the APBN’s growth so far,” he added.

The realization of state revenue in April 2026 was Rp 918.4 trillion, up 13.3% supported by taxes. Taxes grew 16.1% to Rp 646.3 trillion. Purbaya is confident that tax revenue growth will continue, approaching 20% in the future.

The fiscal resilience of Indonesia is under scrutiny today, particularly its ability to withstand external shocks. One of the indicators watched seriously is the debt service ratio to state revenue.

Earlier, S&P Global, in its report “Asia-Pacific Sovereign Rating Trends 2026: Balancing Act Continues” published on February 3, 2026, said that in the worst-case scenario, the ratio could exceed the safe limit.

“Debt service payments by the government generally will exceed 15% of revenue on a sustainable basis,” the agency was quoted as saying on Tuesday (20/5/2026).

For reference, under S&P standards, the safe limit for the ratio of interest payments to revenue is 15%.

The warning was conveyed directly by S&P to Minister Purbaya Yudhi Sadewa at the IMF-World Bank Spring Meetings in Washington, DC, specifically on Tuesday (14/4/2026).

“They discussed in more detail that rating, interest payments, compared to income above 15%,” Purbaya said in a written statement cited on Wednesday (20/15/2026).

The Indonesian government has budgeted debt interest payments in 2026 at almost Rp 600 trillion, precisely Rp 599.5 trillion.

The debt interest payments in this year’s budget are higher than in previous years. In the 2026 APBN, it was set at Rp 552.1 trillion, and in 2024 at Rp 488.4 trillion.

If calculated simply, Indonesia’s debt interest payments are around Rp 599.5 trillion or about 19% of the target revenue of Rp 3,153.9 trillion. Nevertheless, S&P Global has not yet changed Indonesia’s outlook to Stable, and Indonesia’s credit rating remains at BBB.

Watch for Outflows Due to MSCI-FTSE

The challenge for debt service payments is the rise in the US dollar exchange rate, which as of Tuesday (19/5/2026) reached Rp 17,695 per USD. In fact, according to Bank Indonesia Governor Perry Warjiyo at a working meeting with Commission XI of the Indonesian House of Representatives (DPR) on 19/5/2026, the rate has averaged around Rp 16,900.

That level exceeds the assumed rate in the APBN with a range of Rp 16,200 – Rp 16,800 per USD and an average around Rp 16,500 per USD. S&P Global’s report “Credit Conditions Emerging Markets Q2 2026” published on 6 March 2026 also projects the rupiah average in 2026 to be above the APBN’s range, reaching Rp 16,875 per USD.

The rupiah’s weakness risk could re-emerge as investors focus on constituents adjustments in the MSCI Global Standard and MSCI Small Cap indices effective 29 May 2026 and FTSE Index announcements that could trigger foreign capital outflows.

MSCI has officially removed six Indonesian stocks from the MSCI Global Standard Index, namely: PT Amman Mineral Internasional Tbk (AMMN); PT Barito Renewables Energy Tbk (BREN); PT Chandra Asri Pacific Tbk (TPIA); PT Dian Swastatika Sentosa Tbk (DSSA); PT Petrindo Jaya Kreasi Tbk (CUAN); PT Sumber Alfaria Trijaya Tbk (AMRT). In addition, MSCI also dropped 13 Indonesian stocks from the MSCI Global Small Cap Index.

Shortly after the MSCI announcement, other global index providers FTSE also spoke about the future of Indonesian shares included in its indices.

In a new notice titled “Index Treatment for the June 2026 Index Review” released on Wednesday (13/5/2026), FTSE signaled a hard line regarding the potential removal of stocks with high shareholding concentrations (HSC) on the Indonesia Stock Exchange (BEI).

The FTSE Russell document states that if a company becomes subject to a shareholding concentration warning from the exchange and financial authorities, where the shares outstanding are controlled by a small number of parties, then that stock will be excluded from the index in the next review.

“To ensure the integrity and reproducibility of the indexes, FTSE Russell will remove affected securities at zero price at the June 2026 review, effective from market opening on Monday, 22 June 2026,” the document notes.