Rupiah Weakens Following Scrutiny of Poor Tax and Fiscal Performance by Government

Jakarta – The Indonesian rupiah is predicted to continue moving volatilely, though it closed weaker in today’s trading.

Based on data from Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (Jisdor), the rupiah’s exchange rate against the US dollar stood at Rp 16,867 per Wednesday, 11 March 2026. The rupiah’s position strengthened by 12 points from the previous rate of Rp 16,879 in Tuesday, 10 March 2026 trading.

Meanwhile, in spot market trading on Thursday, 12 March 2026 until 09:26 WIB, the rupiah was transacted at Rp 16,894 per US dollar. That position weakened by 8 points or 0.05 per cent from the previous level of Rp 16,886 per US dollar.

Economic and money market observer Ibrahim Assuaibi stated that several international institutions have renewed scrutiny of tax collection performance, which is viewed as the root cause of deteriorating government fiscal credibility. The latest scrutiny comes from three global rating agencies: Moody’s, S&P, and Fitch.

Notably, of the three institutions, only S&P has maintained a stable outlook. The other two—Moody’s and Fitch—have downgraded their outlook from stable to negative.

The outlook downgrade is a consequence of market concerns regarding government fiscal credibility. Tax revenue performance, which forms the foundation of state revenue, is considered misaligned with government spending pressures.

As an example, the widening of the 2025 state budget deficit that reached 2.92 per cent of gross domestic product (GDP) has narrowed the government’s fiscal space. This deficit expanded from the statutory target of 2.53 per cent in the 2025 budget law. The trigger is that tax revenues fell short of expectations at only Rp 1,917.6 trillion, or 87.6 per cent of the 2025 target.

Beyond these three institutions, the issue of fiscal credibility and tax revenues has also been flagged by the World Bank in its Country Program Evaluation Report for the fiscal year 2013–2023. The World Bank assessed that over a 10-year period, the government is considered to have not optimally improved tax revenue performance.

This is evident from Indonesia’s tax ratio figure, which is low for a G20 nation. In 2025, Indonesia’s tax ratio fell to 9.31 per cent of GDP. According to the World Bank’s assessment, the cause of tax ratio performance falling short of expectations is the low compliance of taxpayers.