Indonesian Credit: Down But Not Out

Research evidence excerpt

Indonesian Credit: Down But Not Out

J P M O R G A N Asia Pacific Credit Research

15 July 2026

Indonesian Credit

Down But Not Out

We continue to believe in the Indonesia story, even though there are still many Asia Pacific Credit Research

ACchallenges. Fiscal policy is still disciplined yet more constrained, the rupiah is Aman Aggarwal

being driven more by sentiment and flows than by fundamentals, and policy (852) 2800-0081

rollout/communication remains the key investor overhang. At the same time, we aman.aggarwal@jpmchase.com

think the government has shown it will course-correct when markets react badly, Soo Chong Lim

but such market volatility also creates opportunities for investors. We think (852) 2800-7387

valuations for Indonesian quasi-sovereigns and IG Corporates continue to look soochong.lim@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

attractive versus peers, and remain constructive here. We stay OW on PLN,

Pertamina, MIND ID and Freeport Indonesia.

• The government is maintaining fiscal discipline while reprioritizing

spending to absorb near-term pressures, albeit with slimmer buffers. The

Ministry of Finance has modestly lifted the 2026 deficit target to 2.85% of GDP

(from 2.68%) to accommodate higher fuel-subsidy needs, while reiterating its

commitment to remain below the statutory 3% ceiling. Importantly, the

government is pursuing offsetting efficiencies. Most visibly by scaling back

parts of the current administration’s flagship free meal program (MBG) while

revenue collection has improved from higher commodity prices. Overall, our

economists see the fiscal stance as within guardrails, but with less room for

error if oil prices stay elevated or revenue momentum underdelivers.