S&P Global Ratings reaffirmed the sovereign credit rating of the Republic of Indonesia at BBB with a stable outlook on July 29, 2025. The rating remains one level above the lowest investment grade.

This affirmation reflects a strong growth outlook, a healthy fiscal policy framework, and relatively low levels of external and government debt.

The stable outlook represents S&P’s view that the government remains committed to keeping the fiscal deficit below 3% in support of fiscal sustainability.

Ongoing development of commodity-based downstream industries (hilirisasi) is also expected to support external stability.

Strong Growth Outlook and Fiscal Discipline Support Rating

Bank Indonesia Governor Perry Warjiyo responded to the announcement by stating,

“S&P’s affirmation of Indonesia’s sovereign credit rating at BBB with a stable outlook reflects strong international stakeholder confidence in Indonesia’s macroeconomic stability and continued economic growth prospects.”

He added that this confidence is supported by a cautious policy framework and effective policy mix synergy between the government and Bank Indonesia, despite ongoing global uncertainty.

Risks Identified by S&P for Future Rating Adjustments

S&P noted that Indonesia’s sovereign credit rating may improve if there is a stronger capacity to service external debt, driven by increased foreign income or reduced dependence on external financing.

On the other hand, the rating could be downgraded if certain thresholds are persistently breached:

• Government debt-to-GDP ratio above 3%,
• Interest payments exceeding 15% of state revenue,
• Or structural and prolonged declines in export revenues.

Bank Indonesia Reinforces Monetary Stability and Policy Coordination

Bank Indonesia reaffirmed its commitment to strengthening monetary policy effectiveness to maintain rupiah stability and ensure inflation stays within the target range, while still supporting economic growth.

The central bank will continue to strengthen policy synergy with the government to sustain stability and growth, aligned with the Asta Cita program.

Coordination with the Financial System Stability Committee (KSSK) will also be reinforced to maintain financial system stability.

S&P had previously maintained Indonesia’s sovereign credit rating at BBB with a stable outlook on July 30, 2024.

PHOTO: TIRTO.ID

This article was created with AI assistance.