S&P Global Ratings affirmed Indonesia's sovereign credit rating at 'BBB' with a stable outlook, one notch above the lowest investment grade, as announced on July 29, 2025. This decision provides a boost for President-elect Prabowo Subianto, especially after Moody's Ratings and Fitch Ratings had previously maintained Indonesia's credit rating but downgraded their outlooks from stable to negative due to concerns over weak revenue intake and high debt servicing costs. The stable outlook from S&P reflects the agency's expectation that the government will continue to adhere to its 3% annual deficit ceiling, a key policy anchor for fiscal sustainability, and that the country's development of commodity-related industries will contribute to stable external metrics.
Finance Minister Purbaya Yudhi Sadewa, after a meeting with S&P, stated that the agency confirmed the 'BBB' rating with a stable outlook. He acknowledged S&P's specific concerns regarding Indonesia's interest rate burden to revenue ratio exceeding 15%, which S&P indicated it would continuously monitor. Sadewa, however, expressed confidence that this challenge is controllable and not at a dangerous level, noting S&P's agreement that economic activities have improved. S&P is expected to conduct a thorough reassessment of Indonesia's economy and budget in June.
The affirmation by S&P is supported by Indonesia's robust growth prospects, sound fiscal policy frameworks, and a relatively low burden of net external and government debt. The stable outlook is also attributed to the government's commitment to maintaining the fiscal deficit ceiling and the continued development of commodity-based (downstreaming) industries, which are expected to ensure external stability. Bank Indonesia Governor Perry Warjiyo commented that S&P's decision reflects strong international confidence in Indonesia's macroeconomic stability and growth prospects, supported by prudent policies and effective synergy between the government and Bank Indonesia.
S&P indicated that a potential upgrade could occur 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. Conversely, a downgrade could occur if the government debt to GDP ratio persistently increases above 3%, the government interest payment to revenue ratio exceeds 15% on a sustained basis, or if there is a structural and prolonged weakening in export revenues.
