Indonesian Coordinating Minister for Economic Affairs, Hatta Rajasa, stated that President Prabowo has ordered a resolute crackdown on any violations of stock market regulations.
Foreign media quoted Hatta at a forum on the 5th as saying that Prabowo had instructed officials to respond quickly to the recent sharp decline in the stock market. He also said the authorities will maintain transparent communication with rating agencies and expressed optimism about Indonesia’s ability to uphold market confidence.
International credit rating agency Moody’s downgraded Indonesia’s outlook from “stable” to “negative”, citing concerns over policy stability under Prabowo’s administration.
While confirming Indonesia’s Baa2 rating remains unchanged, Moody’s revised the outlook. Last week, the Indonesian stock index suffered a major sell-off over concerns about its investability, and Prabowo’s push for a broader package of reforms has also sparked market worries about the country’s fiscal and monetary policies.
Bloomberg quoted Moody’s statement as saying: “This outlook revision reflects a decline in decision-making predictability which could undermine policy effectiveness and points to weakening governance. If this trend persists, it could erode the policy credibility that Indonesia has built over the long term, which has supported robust economic growth as well as macroeconomic, fiscal, and financial stability.”
After index compiler MSCI Inc. issued a warning that it might downgrade Indonesia’s stock market status, the market plummeted. Indonesia Stock Exchange CEO Iman Rahman announced his resignation on January 30.
At a press conference, Iman told reporters: “I hope this is for the best for the capital market, and I hope my resignation will improve our capital market.”