And risk outlook
- Indonesia's sovereign credit rating remains at Baa2 with a stable outlook, according to Moody's Ratings, but concerns about fiscal management and rising government debt persist.
- Moody's reaffirmed the rating for US$10 billion (Rp169 trillion) in government foreign-currency bonds.
- A credit rating downgrade signals higher perceived default risk, typically increasing borrowing costs, widening bond risk premiums, and reducing investor confidence.
Indonesia’s sovereign credit rating remains at Baa2 with a stable outlook, according to Moody’s Ratings, but concerns about fiscal management and rising government debt persist. Currency depreciation and slowing economic growth also present potential risks to the country’s future creditworthiness.
Moody’s reaffirmed the rating for US$10 billion (Rp169 trillion) in government foreign-currency bonds. This indicates a moderate and broadly stable sovereign credit risk in the near term.
A credit rating downgrade signals higher perceived default risk, typically increasing borrowing costs, widening bond risk premiums, and reducing investor confidence. These conditions can hinder economic growth and strain the state budget.
Economist Awalil Rizky of the Shining Institute said Moody’s assessment focuses on Indonesia’s ability to meet short-term debt obligations. “It is reasonable for Moody’s to view the situation as still safe, especially given Indonesia’s strong track record in meeting its debt payments,” he told Kompas.id on January 13, 2026.
However, indicators suggest a deterioration in government debt conditions in 2025, with some metrics exceeding internationally accepted best practices.
Debt Manageability
Indonesia’s government debt reached Rp9,645 trillion (US$572 million) as of December 31, 2025, a 9.4 percent increase from Rp8,813 trillion at the end of 2024. The debt-to-GDP ratio stands at 40.52 percent, remaining below the statutory ceiling of 60 percent.
Awalil cautioned that credit rating agencies historically react slowly to emerging repayment difficulties, as seen during the 1998 Asian financial crisis.
The debt-to-revenue ratio is particularly concerning. The Supreme Audit Agency (BPK) projects government debt will reach 349.96 percent of state revenue by the end of 2025 – the second-highest level in two decades,behind only the 369.28 percent recorded in 2020.
This figure exceeds recommendations from international institutions. The International Monetary Fund (IMF) advises a ratio of 90-150 percent, while International Debt relief (IDR) suggests 92-167 percent.
“Rating agencies often react late when a country’s debt servicing capacity begins to weaken,” Awalil said.
Permata Bank Chief Economist Josua Pardede said Indonesia’s debt burden remains manageable, with a debt-to-GDP ratio around 40 percent. He emphasized, however, that the country’s low revenue base limits its fiscal resilience.