Indonesia’s new finance minister pledges policy continuity

President Prabowo Subianto dismissed Finance Minister Purbaya Yudhi Sadewa and appointed Suahasil Nazara as his deputy on Friday, marking the third finance minister in under two years. In his inaugural press conference, Nazara pledged to maintain fiscal policy continuity by adhering to the statutory fiscal deficit ceiling of 3% of GDP.

He called for constructive discussions on any potential changes to fiscal rules, emphasizing the need to strengthen revenue collection, improve spending efficiency, and manage the deficit in a controlled manner. The new minister highlighted Indonesia's economic resilience amid higher global interest rates, noting that the budget deficit stood at 0.93% of GDP in the January to August period, with a projected 2.85% for the entire 2026 fiscal year.

Investors and analysts have closely monitored Indonesia's fiscal policy under Prabowo, who campaigned on costly promises while facing fiscal constraints. This year, capital outflows escalated following downgrades by ratings agencies Fitch and Moody's due to policy unpredictability. Purbaya successfully kept the budget deficit in check but failed to alleviate market concerns over Prabowo's spending plans, central bank interference, and transparency issues at the stock exchange.

Meanwhile, the state budget managed to collect 2,055.6 trillion rupiah in revenues as of August, up 25.4% from the same period last year, and spent 2,295.7 trillion rupiah, up 17.1% year-on-year.

Suahasil reiterated his commitment to the 3% GDP deficit ceiling and pledged to refund taxpayers who had overpaid, a move previously delayed by Purbaya due to requests for more audits. The new finance minister also confirmed the continuation of the policy to keep a minimum of 200 trillion rupiah in state-owned commercial banks until July 2027, despite concerns raised by monetary policymakers.