Indonesia: Fiscal outlook and market implications

Research evidence excerpt

Indonesia: Fiscal outlook and market implications

J P M O R G A N Asia Pacific Economic Research,

Rates & FX Strategy

14 July 2026

Indonesia: Fiscal outlook and

market implications

We stay MW IDR FX, MW IndoGBs and reduce UW

INDONs

Emerging Markets Asia, Economic

and Policy Research

Charnon Boonnuch

(65) 6807 5086

charnon.boonnuch@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch

• The 2026 fiscal deficit target was raised to 2.85% of GDP, from 2.68%, Jin Tik Ngai

reflecting higher fuel subsidy spending but remaining below the statutory

(65) 6807 5556

ceiling. jintik.ngai@jpmorgan.com

• The planned fiscal consolidation via expenditure cuts is encouraging, although JPMorgan Chase Bank, N.A., Singapore Branch

implementation challenges remain given the government’s growth objectives. Emerging Markets Strategy

• Strategy implications: On FX, BOP fundamentals remain firm but Arindam(65) 6882-7759Sandilya AC

sentimental, with FA flows showing signs of improvement in recent months. arindam.x.sandilya@jpmorgan.com

A hawkish pivot from BI provides an anchor, but weak seasonals and a stronger JPMorgan Chase Bank, N.A., Singapore Branch

AC USD likely mean moderate IDR underperformance ahead. We stay MW on the Michael J Loh

GBI-EM but long INR vs PHP and IDR in relative value. (65) 6882-1783

• On rates, net debt issuance is a key catalyst to watch, with significant UW michael.loh@jpmorgan.comJPMorgan Chase Bank, N.A., Singapore Branch

positioning accounting for well-known fiscal risks. Risk premia may need to AC Fariha R Ahmmed

widen further given continued FX pressures and reduced support from the BI.

(44-20) 7134-8537

We remain MW on the GBI-EM and await better levels to turn more fariha.ahmmed@jpmorgan.com

constructive. J.P. Morgan Securities plc