Governor of BI Perry Warjiyo: Negative Outlook from Moody's Does Not Reflect the Weakening of the Fundamental Economy of Indonesia

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo views that the negative outlook adjustment from Moody's rating agency does not reflect the weakening of Indonesia's economic fundamentals.

As is known, on Thursday, February 5, Moody's announced that it would maintain Indonesia's sovereign credit rating at the Baa2 level and adjust the outlook from stable to negative.

In his statement in Jakarta, Friday, February 6, Perry explained that the performance of the domestic economy remained solid, amid high global turmoil and uncertainty.

Economic growth in the fourth quarter of 2025 was recorded at 5.39 percent, so that in 2025 as a whole grew 5.1 percent.

Inflation remained stable at 2.92 percent, within the target range, and the stability of the rupiah exchange rate continued to be strengthened through the strong commitment of the central bank.

The stability of the financial system is also maintained, supported by adequate liquidity, bank capital maintained at a high level, and low credit risk.

In addition, Perry noted, the digitization of payment systems that remain maintained is supported by a stable infrastructure and a healthy industry structure that also supports economic growth.

Going forward, BI estimates that the outlook for Indonesia's economic growth in the medium term will remain solid with an upward trend, supported by controlled inflation.

Economic growth in 2026 is estimated to increase in the range of 4.9-5.7 percent supported by an increase in domestic demand in line with various Government policies and the continued positive impact of the Bank Indonesia policy mix.

This positive performance is expected to continue to improve in 2027, with an economic growth projection of 5.1-5.9 percent, and inflation that will remain under control.

BI said, its party will continue to strengthen the mix of policies to maintain macroeconomic and financial system stability and encourage sustainable economic growth amid increasing global uncertainty,

In addition, the central bank synergizes closely with the KSSK and the Government's Asta Cita Program, and continues to coordinate with the Government to strengthen policy communication in order to maintain market confidence.

In its report, Moody's stated that Indonesia's rating affirmation at Baa2 reflects the continued strength of its economic resilience.

This is reflected in the stable and solid economic growth, supported by structural strengths including natural resources and favorable demographics, which underpin the medium-term growth prospects.

The affirmation of Indonesia's rating is also supported by the credibility of monetary policy and maintained fiscal prudence, which supports macroeconomic and financial system stability.

Meanwhile, the revision of the outlook is influenced by Moody's view of the risks from the decline in policy certainty, which if continued could have implications for economic performance.

This rating agency projects Indonesia's economic growth to remain in the range of 5 percent in the short to medium term, with economic resilience maintained.

Moody's assessed that the fiscal deficit is expected to remain below 3 percent of GDP, while monetary policy is seen to continue to support inflation stability.

Moody's also estimates that the Government's debt-to-GDP ratio will remain low compared to peers. However, according to Moody's, Indonesia still faces challenges in increasing the revenue base, which is needed to drive economic growth while maintaining macro and financial stability.

In this case, Moody's appreciates the Government's efforts to encourage acceptance, including through increased administrative efficiency of taxation and customs.