New Finance Minister vows to keep Indonesia's deficit below 3 percent

Jakarta — On September 14, Indonesia appointed Deputy Finance Minister Suahasil Nazara as the new finance chief, following the removal of his predecessor Purbaya Yudhi Sadewa, according to a statement by President Prabowo Subianto. The 55-year-old economist was sworn in on Monday in Jakarta, with the president instructing him to maintain fiscal credibility.

Suahasil affirmed that his primary mandate is to safeguard the state finances, emphasizing the need to maintain their health and credibility. The outgoing finance chief's tenure began just over a year ago, following a series of violent anti-government protests across the country. Suahasil, who has been serving in the role since 2019, has worked under both Purbaya and his predecessor Sri Mulyani.

Analysts believe that the appointment of Suahasil signals continuity and institutional credibility, with one economist stating that investors may interpret this as a positive sign. However, Suahasil will face the challenge of balancing Prabowo's ambitious growth agenda with the need to keep Indonesia's fiscal deficit in check. Prabowo has set an economic growth target of 8% by 2029, driven by increased public spending, while also bound by law to keep the fiscal deficit within 3% of GDP.

This has raised concerns over the deficit and led to market instability this year, exacerbated by the ongoing conflict in the Middle East. Indonesia's economy grew by 5.3% in the second quarter of the year, according to official data.