Moody's Downgrades Indonesia Outlook, Purbaya Reveals No Reason to Downgrade Debt Rating

JAKARTA - Finance Minister Purbaya Yudhi Sadewa responded to Moody's Investors Service's decision to revise Indonesia's credit rating outlook from stable to negative.

However, Moody's still maintains Indonesia's long-term debt rating at Baa2 level, or one level above the investment grade category.

Purbaya assessed that the potential for a credit rating downgrade had no strong reason because the national economic conditions and fiscal deficit management were still well maintained and even more solid than in a number of other countries.

He said that the government is currently focusing on strengthening the fundamentals of the economy and remains optimistic about the growth prospects in 2026.

"The reason is not very strong for a downgrade (a downgrade in debt ratings). In fact, we should have a gradual upgrade prospect, maybe after the end of the year when our economy grows 6 percent or more. So I will focus on improving the fundamentals of the economy only," he told the media, Friday, February 6.

Purbaya explained that economic performance showed a positive trend, with growth reaching 5.39 percent in the fourth quarter and 5.11 percent cumulatively throughout 2025.

He believes that these improvements will continue and will eventually be reflected in the rating agency's assessment.

"Yes, let it be like that, what is clear is that our economy has turned around, faster than before. In the future it will improve as well, it will be better, I think growth will be faster. Later I think Moody's will see what is happening here more fairly," he said.

"Even though there are programs like they doubt, the economy will grow faster. Slowly, the doubt will disappear again," he added.

As long as the economic foundation remains strong and the direction of growth improves, he continued, there is no reason for investors to doubt the government's ability and commitment to pay off its debt.

"The rating agency actually assesses to see if we are able to pay off debts or want to pay off debts. We fulfill both, so there should be no problem. I think this is only a short-term," he added.

Regarding the impact on foreign capital flows, Purbaya said investor reactions depend heavily on each person's perception of risk.

"If people are cowards, they are afraid, but this way, as long as they see that our economic foundation is improving, especially the fourth quarter last year was good, it went up, even though it was below my target again, it is clear that our economy has turned around. There is no reason for us not to pay or we do not want to pay debts," he said.

However, Purbaya emphasized that the government was still able to control the deficit and Moody's assessment was likely to be released before the latest economic growth data was announced.

According to him, if the growth data has been taken into account, the results of the outlook assessment may be slightly different.

From the fiscal side, Purbaya emphasized that the government's policy direction is on the right track.

"Because from the fiscal side we are moving in the right direction, growth is better, the deficit is still under control. We have managed to reverse the economy at a relatively minimal cost," he explained.