Ousted Indonesia finance minister says he was 'upset', but half expected removal

Indonesia's ousted finance minister, Purbaya Yudhi Sadewa, expressed mixed emotions over his removal from office, stating on Tuesday that he was both upset and half-expecting the decision. President Prabowo Subianto abruptly replaced Sadewa with his deputy, Suahasil Nazara, on Monday, causing shock in the markets. The move was also seen as an effort to restore trust in fiscal policies.

Sadewa learned of his termination through a phone call with the president's spokesperson, Prasetyo Hadi, hours before Suahasil was sworn in to the position.

Sadewa acknowledged receiving a phone call and leaving a parliamentary meeting shortly before Suahasil took over. In a recent interview, he admitted to being upset but asserted that his sleep had improved. Sadewa claimed he had foreseen his removal due to a recent decision he made. He did not specify which decision this was but emphasized that he had no policy disagreements with the president.

The Indonesian finance minister's dismissal came just days after he completed a year in office, during which Southeast Asia's largest economy faced a crisis of confidence among investors and analysts. Prabowo's fiscal policies have been under scrutiny since his inauguration in October 2024 due to costly campaign promises. Sadewa's tenure was marked by the fastest economic growth in three years but also the widest budget deficit in over two decades outside of the pandemic.

Credit rating outlooks from Fitch and Moody's were downgraded, and capital outflows intensified, pushing the rupiah to an all-time low. The concerns stemmed from fiscal profligacy, central bank interference, transparency issues in capital markets, and global risk aversion due to the war in the Middle East.

Despite the rapid economic growth, Sadewa acknowledged that his tenure was "decent" and credited it to rising economic growth. He expressed his intention to spend his retirement fishing in a pond at his house. Speaking at the handover ceremony, Suahasil emphasized the importance of collaboration among stakeholders and pledged to safeguard Indonesia's fiscal credibility, adhering to the legislated fiscal deficit limit of 3% of GDP.

As a seasoned technocrat, Suahasil, 55, was well-known to investors and analysts, who believed he would provide policy continuity and institutional understanding. Analysts also suggested that Suahasil could reassure investors amid ongoing concerns. Shinta Kamdani, who chairs Indonesia's Employers Association, expressed hope that the new leadership transition would maintain policy continuity, ensuring a consistent fiscal direction and continuing efforts to bolster growth while maintaining a healthy budget and promoting investment and productivity.