Indonesian president appoints third finance minister in less than two years

Indonesia’s president on Monday dismissed Finance Minister Purbaya Yehudi Sadewa and replaced him with Deputy Minister Suahashiru Nazara. It is struggling to regain investor confidence amid longstanding concerns about policy decisions and fiscal waste.

Suahashiru, a former academic who has served as deputy finance minister since 2019, is the third person to hold this position under President Prabowo Subianto.

Purvaya was one of many dignitaries to arrive at the State Palace for the swearing-in ceremony, but he was also seen leaving earlier during a parliamentary hearing.

“My priority will be to run a reliable national budget,” Suahasir said after taking office, adding that he was committed to keeping the fiscal deficit below the statutory 3% of gross domestic product.

“I will continue to manage a reliable national budget, ensure reliable public communications, and ensure that the national budget supports the government’s priority programs.”

Prabowo’s dismissal of Purbaya comes days after the former economist marked his first year as finance minister, as Southeast Asia’s largest economy faces a crisis of confidence among investors and analysts.

Mr Prabowo’s fiscal policies have been under scrutiny since coming to power in October 2024, particularly after the government increased its fuel subsidy budget in response to soaring global oil prices, raising further questions about how he will be able to fund his costly flagship programs, such as the controversial free school meals scheme.

The outspoken Purbaya became the second finance minister to be sacked. He was appointed in September last year to replace widely respected Sri Mulyani Indrawati, as Prabowo sought aggressive pro-growth policies over fiscal health.

Purvaya did not immediately respond to a request for comment.

Purbaya’s tenure was marked by economic shocks, including a sharp decline in the rupiah currency and a widening budget deficit. His policy of quickly injecting liquidity into banks to boost growth has also caused friction with central banks.

Both Fitch and Moody’s downgraded Indonesia’s credit rating outlook from stable to negative this year, citing policy uncertainty and fiscal spending plans, hurting sentiment towards the $1.4 trillion G20 economy.

In an exclusive interview with Reuters, his first with foreign media, Purbaya acknowledged six months ago that his unconventional policies, a departure from the country’s conservative fiscal approach, were at the center of growing concerns about how the economy was being run.

He expressed confidence that concerns would not linger, saying in an interview that he had set himself a tight six-month timetable and said if the economy wasn’t moving in the right direction by then, “you can abuse me all you want.”

The latest controversy surrounding Mr. Purbaya was the sudden announcement by sovereign wealth fund Danantara Indonesia that it would transfer 120 trillion rupiah ($6.8 billion) of its profits to the government to help meet this year’s budget deficit target. The Dhanantara chief later said that no such plan had been discussed.

Although Indonesia’s growth rate did increase under the Purbaya administration, it also raised many questions about the reliability of economic data, especially growth rates.

Before joining the government, Suahasil was an academic and researcher. He received his PhD from the University of Illinois at Urbana-Champaign.

Angus McIntosh, ASEAN expert at Aleteia Capital, said Suahasil could bring about more stable and predictable policy decisions.

“Given that Mr. Nazara served under Sri Mulyani and has a technocratic background, this appears to be another move to promote greater stability,” he said.