S&P Maintains Indonesia Rating; Tax Revenues in Focus
JAKARTA, DDTCNews - International credit rating agency Standard & Poor's (S&P) Global Ratings has again maintained Indonesia's sovereign credit rating at BBB for the long term and A-2 for the short term, with a stable outlook. S&P had previously maintained Indonesia's rating at BBB with a stable outlook on 29 July 2025.
One of the factors underpinning this assessment is the strengthening of fiscal performance, particularly the recovery in state revenues supported by tax administration reforms. In its report, S&P considered Indonesia's economic fundamentals to remain robust amid global uncertainty.
"S&P's decision to maintain Indonesia's rating at investment grade with a stable outlook demonstrates that the direction of national economic policy remains credible. The Government will continue to uphold fiscal discipline, strengthen the state revenue base, improve expenditure quality and ensure that financing is managed prudently, efficiently, and sustainably," said the Minister of Finance, Purbaya Yudhi Sadewa, as quoted on Tuesday (14/7/2026).
S&P paid particular attention to the Government's commitment to maintaining the state budget (anggaran penerimaan dan belanja negara/APBN in Indonesian) deficit below 3% of gross domestic product (GDP). This commitment was regarded as a policy anchor reinforcing the credibility of Indonesia's fiscal policy.
In addition to fiscal discipline, S&P noted that state revenues are showing a strong recovery trend. In the first half of 2026, state revenues recorded growth of approximately 21% compared with the same period in the previous year.
According to S&P, this revenue growth was supported by strengthened tax administration, increased taxpayer compliance, and optimisation of non-tax state revenues (penerimaan negara bukan pajak/PNBP in Indonesian), particularly from the natural resources sector.
This assessment indicates that the Government's tax reforms are beginning to have an impact on state revenue capacity. In recent years, the Government has endeavoured to broaden the tax base through the digitalisation of tax administration, improved taxpayer compliance and strengthened oversight and management of tax data.
Going forward, the Government affirmed that it will continue various measures to strengthen the quality of the state budget. These policies encompass strengthening tax revenues and non-tax state revenues, improving taxpayer compliance through the digitalisation of tax administration, optimising revenues from the mineral and natural resources sectors, enhancing the effectiveness of state expenditures and managing financing efficiently whilst keeping debt risks under control.
"S&P also projects that improving state revenues and moderation in financing costs will strengthen Indonesia's fiscal space," reads the Ministry of Finance press release.
Beyond the fiscal dimension, S&P assessed Indonesia's economic growth prospects as remaining strong. Economic growth is projected to be in the region of 5% over the next two to three years, with a projection of approximately 5.1% in 2026.
The rating agency also noted that Indonesia's economy grew 5.6% year-on-year in the first quarter of 2026. This growth was driven by robust domestic demand and increased investment activity.
On structural reform, S&P assessed that policies on natural resource-based industry downstream processing, strengthening of mineral sector governance and optimisation of state asset management may increase domestic added value whilst also strengthening state revenues over the medium term.
S&P also highlighted the strengthened role of Danantara and the management of export proceeds in improving the efficiency of state asset management, enhancing transparency, reducing economic leakage and supporting investment financing in strategic sectors.
Meanwhile, from a macroeconomic stability perspective, S&P took the view that Bank Indonesia (BI) possesses operational independence and adequate policy instruments to maintain monetary and financial market stability. Indonesia's banking system was also assessed as retaining a strong level of capitalisation with limited contingent risks to the Government.
BI Governor, Perry Warjiyo, considered S&P's affirmation to reflect the sustained confidence of international stakeholders in Indonesia's macroeconomic stability and solid economic growth prospects.
"This is supported by the close synergy of policy mixes between the Government and Bank Indonesia in strengthening stability and driving domestic economic growth amid persistently high global uncertainty," he said.
He noted that BI remains committed to strengthening its monetary, macroprudential and payment system policy mix to reinforce stability and contribute to sustainable economic growth. Going forward, BI will also continue to strengthen policy coordination with the Government, including close synergy between monetary and fiscal policy, to mitigate the impact of global uncertainty arising from the conflict in the Middle East on the domestic economy. (dik)
