Rupiah Weakens Following Government's Tax Ratio Increase Initiative

The Indonesian rupiah against the US dollar is predicted to remain volatile but closed weaker in today’s trading. Based on Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (Jisdor), the rupiah stood at Rp 16.919 per dollar on Friday, 6 March 2026, weakening by 33 points from the previous level of Rp 16.886 on Thursday, 5 March 2026.

During spot market trading on Monday, 9 March 2026 until 09:31 Western Indonesia Time, the rupiah was transacted at Rp 16.986 per US dollar. This position weakened by 61 points, or 0.36 percent, from the previous level of Rp 16.925 per dollar.

According to economist and money market observer Ibrahim Assuaibi, the government is seeking to increase the tax ratio following Fitch Ratings’ decision to downgrade Indonesia’s outlook from stable to negative, citing the tax ratio as a key consideration.

Over the past decade, Indonesia’s tax ratio has consistently hovered between 9–10 percent of GDP. The figure has even shown a declining trend, falling from 10.08 percent in 2024 to 9.31 percent in 2025.

Fitch projects that Indonesia’s government revenue ratio will only average 13.3 percent of GDP during 2026–2027, significantly below the median for countries rated ‘BBB’ of 25.5 percent.

The government, through the Coordinating Minister for Economic Affairs, stated that one effort being pursued alongside the Ministry of Finance to boost revenue collection is the implementation of the Coretax core tax administration system update.

The Fitch outlook revision has drawn significant government attention, prompting plans to evaluate and adjust future policy direction, particularly to mitigate risks on the revenue side, which Fitch assessed as weak.

Additionally, the government has responded to Fitch’s concern about high government social spending, particularly the MBG programme, which accounts for 1.3 percent of GDP during 2025–2029. Fitch identified this as a major driver of expenditure burden.

According to Assuaibi, the rupiah remains volatile but closed weaker in the range of Rp 16.850–Rp 17.100.