Indonesia’s ousted finance minister ‘upset’ but half-expected removal

Indonesia's former finance minister, Purbaya Yudhi Sadewa, expressed on Tuesday that he was upset to be removed from his role, but had anticipated the decision. President Prabowo Subianto unexpectedly dismissed Purbaya on Monday, appointing his deputy, Suahasil Nazara, to the finance minister position. The market was surprised by the sudden move, but it was also viewed as an effort to restore confidence in fiscal policies.

Upon learning of his removal during a phone call with Prabowo's spokesperson, Purbaya admitted to feelings of unrest but expressed relief that he could soon sleep soundly. While he claimed there were no policy disagreements with the president, Purbaya acknowledged that his dismissal was partly due to conflicts with other officials.

The removal of the finance minister occurred shortly after marking his first year in the position, during a time when Indonesia faced a crisis of investor confidence and analyst scrutiny. Prabowo's fiscal policies had been under intense examination due to costly campaign promises and the nation's wide budget deficit. Furthermore, credit rating agencies had downgraded Indonesia's outlook, and capital outflows had intensified, causing the rupiah to reach an all-time low.

The reasons behind the fiscal profligacy, central bank interference, and transparency issues in capital markets were attributed to global risk aversion stemming from the Middle East conflict. Purbaya acknowledged his tenure was "decent," citing rising economic growth, but he pledged to spend his retirement fishing in a pond at his home.

Suahasil, a seasoned technocrat, pledged to maintain Indonesia's fiscal credibility and adhere to the legislated fiscal deficit limit of 3% of GDP.