Indonesia’s Deputy Finance Minister Juda Agung dismissed growing concerns that the country could be heading toward another financial crisis similar to the 1997-1998 Asian economic collapse, saying Indonesia’s macroeconomic fundamentals remain strong despite recent pressure on the rupiah and the Jakarta Composite Index (IHSG).
Speaking at the National Conference on Regional Economic Development in Jakarta on Monday, Juda said the current economic environment was far removed from the conditions that triggered Indonesia’s worst financial crisis nearly three decades ago.
His remarks came amid increasing public anxiety over the weakening rupiah, stock market volatility and uncertainty in the global economy, with some commentators and social media users warning that Indonesia could once again face a severe economic downturn.
Juda rejected those claims and stressed that the country’s key economic indicators continue to show resilience.
“Many people, including those in the media and on social media, are saying that our economy is heading toward a crisis like 1997-1998. But if we look at the data, we are far from a crisis situation,” Juda said.
According to him, Indonesia’s economy grew by more than 5.6% in the first quarter of 2026, supported primarily by strong household consumption and accelerated government spending.
He noted that domestic demand remains robust despite ongoing global uncertainties, including geopolitical tensions, rising commodity prices and financial market fluctuations.
Juda also highlighted that inflation remains under control. Indonesia recorded annual inflation of 2.42% in April, a level he described as manageable and supportive of economic stability.
Meanwhile, state revenue reached Rp918 trillion by April 2026, growing 13.3% year-on-year. Tax revenue alone expanded by 16.1%, indicating improving economic activity and stronger fiscal performance.
Government spending also rose sharply, increasing 34.3% during the same period. Despite the significant rise in expenditure, the fiscal deficit remained relatively low at 0.64% of gross domestic product, improving from 0.92% recorded in March.
“All of this shows that our state budget is expansionary but still measured,” Juda said.
“In this difficult global situation, we must maintain both economic growth and fiscal discipline at the same time. The state budget has successfully become a driver of the economy while also maintaining fiscal sustainability amid rising oil prices.”
He said Indonesia’s ability to sustain growth while controlling inflation and maintaining a manageable deficit demonstrated that the government’s economic policies were working effectively.
Juda then outlined what he described as the three major sources of economic crises commonly experienced by countries around the world, arguing that Indonesia currently shows no signs of vulnerability in any of those areas.
The first source of crisis, he explained, is fiscal instability, similar to the debt crises experienced by many Latin American countries during the 1980s.
At that time, governments faced ballooning budget deficits and were eventually unable to finance spending because investors lost confidence in government debt instruments.
“The first example is the Latin American crisis in the 1980s, which was essentially a fiscal or debt crisis,” Juda said.
“The fiscal deficit became too large, and governments could no longer finance themselves because investors no longer trusted them. They issued bonds, but nobody wanted to buy them.”
He argued that Indonesia’s current situation is fundamentally different because the country’s fiscal position remains stable and investor confidence in government securities is still strong.
According to Juda, one of the clearest indicators of market confidence is the movement of government bond yields, which have not shown any sharp spikes despite global financial volatility.
“If investors had no confidence in our fiscal condition, our bond yields would soar,” he said.
“Right now, yields are around 6.5% to 6.7%. There has been some increase, but it is not significant.”
He added that Indonesia continues to maintain access to financing markets and has not experienced the kind of panic that typically precedes a fiscal crisis.
The second source of crisis, Juda said, comes from balance of payments problems, similar to what Indonesia experienced during the 1997-1998 Asian financial crisis.
At that time, many Indonesian companies accumulated large amounts of foreign debt. When the rupiah weakened sharply and foreign capital suddenly fled the country, corporate balance sheets collapsed, triggering widespread economic turmoil.
However, Juda emphasized that Indonesia’s external sector today is far healthier and more balanced than it was during the late 1990s.
“Back then, companies borrowed heavily from abroad and became vulnerable when the exchange rate collapsed and capital inflows stopped suddenly,” he said.
“But today, if we look at our balance of payments data, the situation is relatively healthy and balanced.”
He argued that Indonesia’s foreign exchange reserves, export performance and current account management are now much stronger than they were before the Asian financial crisis.
Juda also pointed to tighter financial regulations and improved banking supervision implemented over the past two decades as factors that have strengthened the country’s resilience against external shocks.
The third major source of crisis, according to Juda, is instability in the financial sector itself, similar to the global financial crisis of 2008 in the United States.
That crisis was triggered by excessive lending, asset bubbles and speculative financial activity, particularly in the property market.
“The last source of crisis can emerge from the financial system,” he explained.
“Massive lending and asset bubbles can occur in various sectors, including property. But we do not see those warning signs in Indonesia either.”
Juda said the country’s banking sector remains relatively healthy, with adequate liquidity, strong capital levels and controlled credit growth.
He added that there are currently no indications of excessive speculation or unsustainable asset price inflation that could threaten financial stability.
“So the three main sources of crisis are not visible in the data we are monitoring today,” he said.
The deputy finance minister acknowledged that Indonesia is still facing challenges from the global environment, including geopolitical conflicts, rising energy prices and slower global growth.
However, he argued that the country’s economic fundamentals remain strong enough to absorb external shocks.
Recent market volatility has raised concerns among investors and the public, especially as the rupiah has weakened against the US dollar and the Jakarta Composite Index experienced significant fluctuations in recent weeks.
Some analysts have also warned about the impact of higher global interest rates and uncertainty stemming from geopolitical tensions in the Middle East and other regions.
Despite those pressures, Juda maintained that Indonesia is in a much stronger position than during previous crises because of reforms implemented after 1998.
Those reforms include stronger fiscal discipline, independent monetary policy, improved banking regulations and a more diversified economy.
Indonesia’s government has repeatedly stressed that maintaining economic stability remains one of its top priorities amid global uncertainty.
Bank Indonesia has also continued efforts to stabilize the rupiah through monetary interventions while coordinating closely with the Finance Ministry to maintain investor confidence.
Juda’s comments appeared aimed not only at calming markets but also reassuring the public that the government remains confident in the country’s economic trajectory.
He said maintaining confidence is crucial because public sentiment and investor trust can significantly influence economic stability during periods of uncertainty.
“Our economic indicators show resilience,” Juda said.
“We still have strong growth, controlled inflation, manageable deficits and stable financial conditions. These are not characteristics of a country heading into crisis.”
