TEMPO.CO, Jakarta - The global credit rating agency Fitch Ratings revised its outlook for Indonesia's debt from stable to negative on Wednesday, March 4, 2026. Despite this, Fitch maintained Indonesia's rating at BBB, indicating it is still investment-grade.
"The Outlook revision reflects increasing policy uncertainty and erosion of Indonesia's policy mix consistency and credibility amid growing centralisation of policymaking authority," Fitch wrote in its official statement on Wednesday, March 4, 2026. According to Fitch, this could weaken medium-term fiscal prospects, erode investor sentiment, and put pressure on external reserves.
In its considerations, Fitch highlighted the eight percent economic growth target, which could lead to the loosening of fiscal and monetary policies. This is seen as creating risks to macroeconomic and financial stability. Fitch itself predicted a 2.9 percent Budget Deficit to Gross Domestic Product ratio in 2026.
Fitch assessed that government social programs, such as the free nutritious meal program (MBG), would require substantial funding. On one hand, Fitch predicted government revenue to be only 13.3 percent of GDP in 2026 and 2027, amid the absence of significant measures to raise revenue.
Fitch also highlighted Danantara, which aims to improve State-Owned Enterprises' efficiency and support growth through commercial investments. Danantara plans to invest US$26 billion this year in downstream projects.
"Uncertainty remains over whether the fund's mandate could expand over time to encompass quasi-fiscal activities through leveraged investments to support government policy priorities, which could reduce fiscal transparency and policy consistency and raise contingent liability risks to the sovereign," Fitch wrote.
Fitch's downgrade of Indonesia's debt outlook followed a similar decision by Moody's on February 5, 2026. Last month, Moody's lowered Indonesia's outlook from stable to negative. Based on its official statement, Moody's stated that the outlook change was driven by policy uncertainty that poses a risk to effectiveness and indicates weakened governance.
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