S&P Global Ratings reaffirmed Indonesia's BBB investment grade with a stable outlook on Tuesday but highlighted fiscal uncertainties under the incoming government led by Prabowo Subianto.

Prabowo's team has assured the market of their commitment to the legal deficit ceiling of 3% of GDP and maintaining the current debt-to-GDP ratio. This follows media reports suggesting potential revisions to the legal budget ceiling and possible increases in the debt-to-GDP ratio under Prabowo's leadership.

S&P noted that despite these assurances, policy uncertainty will persist until the new government details its plans. The rating agency projects Indonesia's annual budget deficit over the next three years to be higher than the 2022-2024 period, at 2.9% of GDP, due to Prabowo's larger spending plans.

Prabowo's campaign promises include a 450 trillion rupiah ($27.62 billion) program to provide free nutritious meals to over 80 million recipients, including pregnant women, toddlers, and students. Additional pledges involve increasing housing and food production, aiming to achieve 8% annual GDP growth, up from the current 5%.

S&P forecasts a slight slowdown in Indonesia's economic growth to 4.9% in 2026 and 2027, from 5.05% in 2023. The revenue-to-GDP ratio is expected to decrease slightly to 14.8% of GDP from 15% in 2023, amid moderating commodity prices such as nickel.

Assuming Prabowo's government adheres to the legal budget deficit limits, S&P anticipates Indonesia's debt-to-GDP ratio to remain around 39%, well below the 60% legal ceiling.

Prabowo and vice president-elect Gibran Rakabuming Raka, the eldest son of outgoing President Joko Widodo, will be inaugurated this October following their victory in the February election.