Indonesia's Outlook Downgraded, Airlangga Urges Coretax to Increase Tax Ratio

JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the government continues to encourage the strengthening of the tax system through the implementation of coretax to increase the national tax ratio.

According to him, this step is in line with the record of Fitch Ratings which lowered the outlook for Indonesia's debt rating to negative.

Airlangga said the evaluation from the rating agency would be considered by the government, especially in efforts to strengthen state revenues.

He emphasized that the government would continue to monitor the implementation of coretax so that tax contributions to the economy could increase.

"Well, we will continue to control this core tax so that we can increase our tax ratio," he told the media, Thursday, March 5.

According to him, the government is aware of the importance of strengthening the source of state revenue in the midst of ongoing global economic pressures, so that tax system reform through the implementation of coretax at the Ministry of Finance continues to be accelerated.

In its latest report, Fitch revised Indonesia's outlook from stable to negative and assessed an increase in policy uncertainty that could potentially affect Indonesia's fiscal outlook in the medium term.

In addition, Fitch also highlighted the Indonesian government's revenue ratio, which is still relatively low compared to other countries with the same rating.

Government revenue is forecast at just around 13.3 percent of gross domestic product in 2026-27, well below the median for BBB-rated countries of around 25.5 percent.

Airlangga added that the current global economic conditions were also influenced by geopolitical tensions in various regions and the situation, which also impacted the economic prospects of many countries.

"The world economy is all affected not only by Fitch but also by the war," he said.

Despite the downgrade, Fitch Ratings still maintains Indonesia's debt rating at the BBB level, which is still in the investment-worthy category. Airlangga assessed that this shows that Indonesia's economic fundamentals are still relatively strong.

"The important thing is that Indonesia remains investment grade. In the future, of course, what Fitch's warning is, we learn, it is to remind Indonesia what we must learn in the future," he said.