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2024 electoral tensions risk slowing Indonesia's reform: Moody’s
Moody's 2023 Asia-Pacific outlook cautions that even as the government remains focused on post-pandemic recovery, growing political tension ahead of the 2024 election could restrict further progress in economic reform.
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A worker from the Depok General Elections Commission (KPU) arranges ballot boxes on Nov. 25, 2020 at a warehouse in Cimanggis district in Depok, West Java. (JP/P.J.Leo)
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he political battle ahead of Indonesia’s 2024 presidential election is likely to hamper economic policy reform due to the potential for high tension among candidates and their supporters leading to social unrest during the political year, according to Moody’s Investors Service.
The credit rating and research firm forecast that intensifying social resistance would make for a political climate less conducive to the government’s continuing policy reforms toward economic recovery after the COVID-19 pandemic. Meanwhile, the government was expected to focus on maintaining political stability and meeting public demands.
“Countries such as Bangladesh, India, Indonesia and Maldives will have elections in 2023 or 2024, constraining their capacity to enact further structural reforms without the prospect of social resistance,” Moody’s elaborated in its Sovereigns – Asia-Pacific: 2023 outlook, released on Monday.
Labor and income reforms in Indonesia were projected to face high exposure to social resistance, while social risks were relatively modest in basic services as well as health and safety, the report stated.
Government policies in many countries, including Indonesia, would remain oriented toward social stability and mitigating the long-term effects of high commodity prices, as well as the lingering effects of the pandemic on aspects such as incomes, household savings and employment, Moody’s said.
Read also: Year of turmoil to test fiscal consolidation
Despite the upcoming challenges, Indonesia was expected to maintain a stable credit outlook, which was supported by its low debt burden and fiscal deficit relative to its similarly rated peers.
