S&P Global Maintains Indonesia's Debt Rating with Stable Outlook

S&P Global Ratings has maintained Indonesia’s sovereign debt rating at BBB with a stable outlook. S&P stated that the stable outlook reflects their expectation that government revenues will continue to improve this year and that the administration will keep the state budget deficit below 3 percent of Gross Domestic Product. “Our rating on Indonesia reflects strong economic growth prospects, generally prudent macroeconomic policies, and a relatively light net external and general government debt burden compared with peers,” S&P wrote in its announcement on Monday, 13 July 2026. Nonetheless, S&P also noted that Indonesia has a moderate GDP per capita, a narrow export and fiscal revenue base, and a domestic financial sector that is less deep and diversified compared to similarly rated countries. S&P forecasts the Indonesian economy will grow around 5 percent over the next two to three years, despite surging oil prices. In its analysis, the agency assessed that the formation of PT Danantara Sumberdaya Indonesia could impact investment sentiment and economic growth. However, this is not S&P’s base-case scenario as they believe the government responds to industry input and has demonstrated flexibility in policy implementation. S&P expects the government will remain committed to maintaining the budget deficit below 3 percent of GDP, although rising oil prices will increase compensation payments and subsidies to keep fuel prices in check. S&P also highlighted the government’s move to cut spending on the free nutritious meal programme. They estimate a third of the programme’s initial budget will be trimmed through changes to programme parameters, improved efficiency, and tighter oversight. Despite the controlled fiscal deficit, S&P warned that pressure on government debt payments remains high, driven by faster debt accumulation during the pandemic, rising government bond yields, and rupiah depreciation. “An improvement in this ratio could depend on sustained revenue growth over the next two to three years and the success of government initiatives to broaden the revenue base,” S&P said.