Government Vows to Maintain Fiscal Discipline as Markets React to Rating Concerns

JAKARTA, Investortrust.id — Indonesia’s government, financial authorities, and major banks moved in concert on Monday, Feb 9, 2026 in Jakarta to contain market concerns after Moody’s Ratings revised the country’s economic outlook to negative, a decision that rattled investor sentiment but left the sovereign credit rating at investment grade. The response sought to underline fiscal discipline, banking sector resilience, and policy credibility amid heightened scrutiny.

State Secretary Prasetyo Hadi said the government remained firmly committed to maintaining fiscal discipline and adhering to statutory deficit limits. He stressed that no fiscal rules had been breached and that budget management remained within the boundaries set by law.

“No, nothing has been violated so far, and the deficit ceiling is still well maintained,” Prasetyo said at the Presidential Palace complex. He added that the administration continued to focus on strengthening economic fundamentals and pushing government spending early in the year to support the real sector.

Prasetyo said the government was optimistic about national economic management and maintained ongoing communication with international rating agencies. “Communication is continuously carried out regarding this matter,” he said.

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Moody’s earlier changed Indonesia’s outlook from stable to negative while maintaining the sovereign rating at Baa2, one notch above the investment grade threshold. The agency cited shifts in fiscal policy direction and Indonesia’s relatively weak revenue base as key factors behind the decision.

In its assessment, Moody’s said that despite efforts to improve tax and customs efficiency, Indonesia’s track record in expanding its revenue base still posed risks of a wider fiscal deficit. The agency also flagged potential weaknesses in policy planning and communication that could affect policy credibility.

The pressure was intensified by the government’s push to expand social programs, including the free nutritious meal initiative and affordable housing schemes. Moody’s noted that these programs were being financed through spending cuts and reallocations across ministries, including infrastructure maintenance budgets.

Separately, Coordinating Minister for Economic Affairs Airlangga Hartarto called on major Indonesian banks to proactively explain Moody’s concerns following the revision of outlooks for several large lenders. He said clear and comprehensive communication with rating agencies was essential to address perceived risks.

“It needs an explanation from each bank to Moody’s, because with all rating agencies the key is to clarify what their concerns are, and that must be answered properly,” Airlangga said at the ABAC Meeting I 2026 in Jakarta on Saturday, Feb 7, 2026.

Airlangga emphasized that Indonesia’s national credit rating remained firmly within investment grade territory. “From a national perspective, Indonesia remains investment grade, only the outlook is what they are concerned about, and that concern needs to be answered,” he said.

On Feb 6, 2026, Moody’s revised the outlooks of five major Indonesian banks while maintaining their respective credit ratings. The banks included Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, Bank Central Asia, and Bank Tabungan Negara.

Moody’s said Bank Mandiri continued to show strong capital, funding, and profitability, but warned of declining capital buffers, credit risks from earlier aggressive loan growth, and high exposure to commodities and other high risk sectors. The bank’s capital ratio was projected to ease to around 14.5 percent to 15 percent in 2026 due to high dividend payouts and asset growth.

For Bank Rakyat Indonesia, Moody’s assessed profitability and capitalization as very strong, although asset risk was expected to remain elevated in 2026 and 2027 due to its significant exposure to micro, small, and medium enterprise lending. Profitability was projected to soften as margins tightened and credit costs stayed high.

Meanwhile, Bank Negara Indonesia was seen as having solid capitalization and stable funding, though with profitability below peers. Moody’s cited pressure on net interest margins and lingering asset quality risks from restructured and special mention loans.

Market sentiment showed signs of stabilization as the Jakarta Composite Index rebounded sharply on Monday, Feb 9, 2026, rising 1.22 percent to close above the 8,031 level. The rebound followed heavy losses in the previous week, when the index plunged nearly 4.7 percent and became the world’s worst performing equity benchmark year to date.

Analysts said the earlier sell off was driven by a combination of MSCI’s temporary freeze on Indonesian equities and Moody’s decision to downgrade the country’s outlook. Despite Monday’s recovery, the Jakarta Composite Index remained down more than 8 percent year to date, highlighting the fragile balance between policy reassurance and investor confidence.