The risk of political uncertainty in Indonesia has risen because of turmoil over the past two weeks, raising the risk of a sovereign rating downgrade by international rating agencies. The Finance Ministry and an economist gave differing assessments.

The Finance Ministry's view

Acting Director General of Economic and Fiscal Strategy at the Finance Ministry, Hidayat Amir, said he remains optimistic that rating agencies will keep a positive outlook for Indonesia amid the political turmoil. He explained that political stability carries weight in rating calculations such as Fitch's, but that assessment concerns long-term political turmoil.

According to Amir, Indonesia's democracy is so far still judged to be good, and government handling of conflict that can be resolved well will be a positive assessment. "I am quite confident, as we are used to managing this. I mean Indonesia's democracy is already mature," he said at the Finance Ministry headquarters in Jakarta on Friday (13/11/2026).

He said the government constantly maintains political stability so that it supports economic growth. Short-lived political turmoil, in his view, is not a significant factor in the assessment, which looks more at economic fundamentals. "For the rating, it has no impact if only judged from that short period. They will surely look at the fundamentals," he said. "There will be a review after the rating. But there will be an assessment. They will surely look at the whole picture," he stressed.

Warning from a CORE Indonesia economist

Center of Reform on Economics (CORE) Indonesia economist Dipo Satria Ramli said the risk of political uncertainty has risen and could affect confidence. Prolonged political controversy can reduce the confidence of markets and businesses, which most dislike uncertainty, and could even lead to a sovereign rating downgrade by agencies such as Fitch.

"It very much could (be downgraded), because governance and political stability, or structural features, carry the greatest weight in Fitch's methodology," Dipo told CNBC Indonesia.

Another risk is that investors may immediately demand a higher risk premium, pushing government bond yields up. "If sovereign bond yields rise, then bank borrowing costs go up, such as credit cards, business loans, MSME loans and others, and the burden on the state budget grows," he said. In the end, the state budget bears larger interest costs. As an example, the 5-year government bond rate of 7.44% could rise to, say, 7.75% if political turmoil continues.

The weight of politics in Fitch's assessment

Under its Sovereign Rating Criteria, Fitch Ratings incorporates the World Bank Governance Indicators (WBGI) into its quantitative Sovereign Rating Model (SRM) as the most objective starting point. Fitch complements it with a political risk assessment in a Qualitative Overlay (QO) framework to cover factors not fully captured by the WBGI.

"The importance of political risk for sovereign ratings is reflected in the fact that the composite WBGI has the largest weight, at 18.1%, compared with other factors in the SRM," the source quoted Fitch on Friday (13/11/2026). Fitch added that the WBGI has the highest explanatory power of any single variable for the sovereign rating portfolio it has assigned over the past 15 years.

Indonesia's current rating position

Fitch earlier revised the outlook on Indonesia's Long-Term Foreign-Currency Issuer Default Rating to negative from stable. Based on the assessment as of March 2026, Indonesia's rating is still BBB, or investment grade.

According to the source, the driver of that latest assessment was the focus of President Prabowo Subianto's government on an ambitious 8% growth target and higher social spending. Fitch judged this could create a much looser mix of fiscal and monetary policy, posing risks to macroeconomic and financial stability. Fitch said that risk is reflected in the government's and parliament's draft revision of the State Finance Law in the 2026 Priority Prolegnas, which opens the possibility that the deficit cap is loosened from the 3% of GDP level that has been consistently maintained.

Sources

• Gejolak Politik Bisa Pengaruhi Rating Utang RI, Kemenkeu Buka Suara — CNBC Indonesia (Robertus Andrianto), 13 November 2026 15:45 WIB. https://www.cnbcindonesia.com/market/20261113134652-17-785014/gejolak-politik-bisa-pengaruhi-rating-utang-ri-kemenkeu-buka-suara