Indonesian President Prabowo Subianto has sacked finance minister Purbaya Yudhi Sadewa and appointed his deputy, Suahasil Nazara, as his replacement, the president’s office said on Monday, Reuters reported.
Suahasil, who has served as deputy finance minister since 2019, was among senior officials who arrived at the state palace for a swearing-in ceremony. Purbaya, 61, was earlier seen leaving in the middle of a parliamentary hearing, underscoring the abrupt nature of the change at a time when Southeast Asia’s largest economy is facing growing concerns among investors and analysts.
Following his inauguration, Suahasil said his priority would be to maintain confidence in the country’s public finances. “The priority is to run a credible state budget,” he said, committing to keeping the fiscal deficit below the legislated limit of 3% of GDP.
“I will continue to run a trustworthy state budget, ensure trustworthy public communication, and also ensure that what the state budget does supports the government’s priority programs,” he added.
Purbaya’s dismissal came only days after he marked one year in office. He had taken over the finance ministry in September last year from long-standing finance minister Sri Mulyani Indrawati, as Prabowo pursued aggressive pro-growth policies rather than placing the same emphasis on fiscal prudence.
His tenure was subsequently marked by a series of economic shocks, including a sharp fall in the rupiah and a widening fiscal deficit. Purbaya’s policy of injecting rapid liquidity into banks to stimulate economic growth also generated friction with the central bank, adding to uncertainty over the government’s economic approach.
The pressures have affected international perceptions of Indonesia’s finances. Two ratings agencies downgraded the country’s credit rating outlook from positive to negative this year, citing policy uncertainty and fiscal spending plans. The moves further damaged sentiment towards the $1.4 trillion G20 economy.
Purbaya had developed a reputation as a straight-talking finance minister, but his approach increasingly became associated with the tensions surrounding the government’s economic strategy. His departure therefore comes at a sensitive moment for an administration seeking to pursue stronger economic growth while maintaining confidence in fiscal management.
The latest controversy involving Purbaya centred on sovereign wealth fund Danantara Indonesia. He had suddenly announced that Danantara would transfer 120 trillion rupiah ($6.8 billion) of its profits to the government to help meet this year’s fiscal deficit target.
The announcement was subsequently challenged by Danantara’s head, who said that no such plan had been discussed. The disagreement added another layer of uncertainty around the government’s efforts to manage its finances and meet its fiscal objectives.
Purbaya did not immediately respond to a request for comment on his dismissal.
Suahasil now takes over the finance ministry with a clear public commitment to fiscal credibility and communication. His pledge to keep the deficit below the legislated 3% of GDP limit signals an immediate focus on restoring confidence in the management of Indonesia’s public finances as the government continues to pursue its priority programmes.
