Moody's Ratings remains concerned about Indonesia's policy uncertainty and fiscal sustainability risks, reaffirming its cautious stance and warning that downside risks may persist. Martin Petch, vice president of Moody's Sovereign Risk Division, said that despite some positive developments, since the agency downgraded Indonesia's rating outlook to negative in February this year, the risk balance has become “slightly more negative. We are seeing some pressure beginning to show, especially after the Iran war, where subsidy spending has increased markedly, which is putting pressure on this year and next year's financial performance.” This view reflects investors' continuing concerns about Indonesian President Prabowo Subianto's economic agenda. Concerns about fiscal discipline, central bank independence, and the government's expanding role in key industries continued to drag down Indonesian asset performance this year, triggering a wave of sell-offs, making Indonesian bonds, currency, and stock markets among the worst performing assets in Asia. One risk area worth paying particular attention to is PT Danantara Sumberdaya Indonesia, an agency established in May to monitor the export of raw materials. Petch said the agency's lack of clarity in terms of reference heightened investors' concerns about expanded government intervention.

Moody's Ratings remains concerned about Indonesia's policy uncertainty and fiscal sustainability risks, reaffirming its cautious stance and warning that downside risks may persist. Martin Petch, vice president of Moody's Sovereign Risk Division, said that despite some positive developments, since the agency downgraded Indonesia's rating outlook to negative in February this year, the risk balance has become “slightly more negative. We are seeing some pressure beginning to show, especially after the Iran war, where subsidy spending has increased markedly, which is putting pressure on this year and next year's financial performance.” This view reflects investors' continuing concerns about Indonesian President Prabowo Subianto's economic agenda. Concerns about fiscal discipline, central bank independence, and the government's expanding role in key industries continued to drag down Indonesian asset performance this year, triggering a wave of sell-offs, making Indonesian bonds, currency, and stock markets among the worst performing assets in Asia. One risk area worth paying particular attention to is PT Danantara Sumberdaya Indonesia, an agency established in May to monitor the export of raw materials. Petch said the agency's lack of clarity in terms of reference heightened investors' concerns about expanded government intervention.