Indonesia’s president sacks finance minister, promotes deputy

Jakarta: Indonesian President Prabowo Subianto dismissed Finance Minister Purbaya Yudhi Sadewa and promoted Deputy Finance Minister Suahasil Nazara to replace him, according to a statement from the president's office on Monday. Nazara, who has been serving as deputy finance minister since 2019, attended the state palace swearing-in ceremony while Purbaya, 61, left the parliamentary hearing early.

Nazara emphasized the need to manage a credible state budget during his inauguration, stating his commitment to keeping the fiscal deficit below the legislated limit of 3% of GDP. He also mentioned his intention to maintain trustworthy public communication and support the government's priority programs through the state budget.

Purbaya's dismissal occurred just a few days after he completed his first year in office, as Indonesia's largest economy faced a crisis of confidence from investors and analysts. The straight-talking Purbaya, who replaced long-serving Finance Minister Sri Mulyani Indrawati in September last year, brought an aggressive pro-growth policy over fiscal prudence.

However, his tenure was marked by various economic challenges, including a devalued rupiah, a growing fiscal deficit, and the implementation of quick liquidity injections into banks to spur growth, which strained relations with the central bank. Two credit rating agencies downgraded Indonesia's credit outlook from positive to negative this year, citing policy uncertainty and fiscal spending plans, which negatively impacted sentiment for the US$1.4 trillion G20 economy.

The most recent controversy involved Purbaya's announcement that the sovereign wealth fund Danantara Indonesia would transfer Rp120 trillion (US$6.8 billion) of its profits to the government to aid in meeting the year's fiscal deficit target. However, the head of Danantara later denied any prior discussion of such a plan.