Indonesia's president replaces finance minister with deputy, official says

Indonesian President Prabowo Subianto dismissed Finance Minister Purbaya Yudhi Sadewa and promoted his deputy, Suahasil Nazara, to the position, according to the president's office on Monday. Suahasil, who has been serving as deputy finance minister since 2019, took the oath of office at a ceremony at the state palace. Purbaya, 61, left a parliamentary hearing early before his dismissal.

Suahasil emphasized the importance of a credible state budget during his inauguration, stating his commitment to maintaining the fiscal deficit below the legislated limit of 3% of GDP. He also pledged to uphold trustworthy public communication and ensure that the state budget supports the government's priority programs.

Purbaya's tenure as Finance Minister came to an abrupt end just days after he completed one year in office. The crisis of confidence affecting Indonesia's largest economy stemmed from investor and analyst concerns. Purbaya, known for his straightforward approach, replaced the long-serving Finance Minister Sri Mulyani Indrawati in September of the previous year, as Prabowo sought to pursue aggressive growth policies over fiscal prudence.

Purbaya's time in office was marked by several economic challenges, including a sharp decline in the rupiah currency, a significant increase in the fiscal deficit, and disagreements with the central bank over liquidity injection to spur growth. Two credit rating agencies downgraded Indonesia's credit outlook from positive to negative this year, citing policy uncertainty and fiscal spending plans, which further eroded investor sentiment in the US$1.4 trillion G20 economy.

The latest controversy involving Purbaya centered around his sudden announcement that the sovereign wealth fund Danantara Indonesia would transfer Rp120 trillion (US$6.8 billion) of its profits to the government to assist in meeting the year's fiscal deficit target. Following the announcement, the head of Danantara later denied that such a plan had been discussed.