February 6, 2026 | 07:54 am
TEMPO.CO, Jakarta - Coordinating Minister for Economic Affairs Airlangga Hartarto responded to Moody's downgrade of Indonesia's outlook from stable to negative. According to him, investment grade remained at Baa2, indicating investment worthiness.
Moody's underscored Indonesia's fiscal spending in its report. Airlangga admitted the country's state budget this year is quite different. "We have allocated a lot from the state budget for the president's flagship programs including free nutritious meals, Red and White Village Cooperatives, and public services," Airlangga said in his address at the Annual Meeting of the Financial Services Industry at Hotel Bidakara, Jakarta on Thursday, February 5, 2026.
Another point that Moody's highlighted is the establishment of the sovereign wealth fund Danantara. Airlangga explained that while investments were previously supported by state-owned enterprises or the state budget, they are now funded by Danantara.
According to Airlangga, many rating agencies fail to acknowledge this. "So we have to explain because with Danantara, we are actually unlocking and reforming state-owned enterprises that they always requested to be separated and move like the private sector," Airlangga said.
The international credit rating agency Moody's downgraded the rating outlook for the government debt from stable to negative on February 5, 2026. According to their official statement, Moody's stated that this change in outlook is driven by policy uncertainty that risks disrupting effectiveness and signaling weakened governance.
Moody's also highlighted the fiscal deficit amid increased spending and a weaker revenue base. The pressure increases due to the expansion of social programs, including the Free Nutritious Meal (MBG) and public housing initiatives. These programs are funded through budget cuts and priority adjustments in various ministries, including infrastructure maintenance budgets.
"Further expansion may strain the government's ability
to reorient a relatively small budget compared to the size of the economy," as quoted from Moody's written statement on Thursday, February 5, 2025.
In addition, Moody's also highlighted the establishment of Danantara, deemed worsening uncertainty in financing, policymaking, and investment priorities.
Ilona Estherina contributed to the writing of this article
Read: Moody's Cuts Indonesia's Outlook from Stable to Negative
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