S&P Affirms Indonesia’s Investment-Grade Rating, Keeps Stable Outlook

S&P Global Ratings affirmed Indonesia's long-term 'BBB' and short-term 'A-2' sovereign credit ratings, maintaining a stable outlook. This decision, announced on July 29, 2025, reflects S&P's expectation of the government's continued adherence to a 3% annual fiscal deficit ceiling and the stable external metrics driven by the country's commodity-related industries.

The stable outlook comes despite previous warnings from S&P Global Ratings regarding potential downside risks, particularly the rising fiscal pressures from higher debt-servicing costs. The agency specifically noted that interest payments have likely exceeded the 15% threshold of government revenue, a metric it will continue to monitor closely. However, Finance Minister Purbaya Yudhi Sadewa, after a meeting with S&P, reassured that these concerns are controllable and that "all economic activities have improved."

S&P indicated that a downgrade could occur if general government interest payments surpass 15% of revenue on a sustained basis, net general government debt consistently rises by more than 3% of GDP annually, or if there is a structural slowdown in export receipts. Conversely, an upgrade could be considered if material improvements in Indonesia's external metrics lead to narrow net external debt falling below 50% of current account receipts and gross external financing needs going below 50% of the sum of current account receipts and usable reserves.

Bank Indonesia Governor Perry Warjiyo welcomed S&P's affirmation, stating it reflects strong confidence from international stakeholders in Indonesia's macroeconomic stability and robust growth prospects, supported by prudent policies and synergy between the government and Bank Indonesia.

This affirmation by S&P contrasts with Moody's Ratings and Fitch Ratings, which had previously maintained Indonesia's credit rating but downgraded the outlook from stable to negative due to weak revenue intake and high debt servicing costs. S&P is expected to conduct a thorough reassessment of Indonesia's economy and budget in June.