By: Ainur Rohmah<\/p>\n
Indonesian President Prabowo Subianto dismissed outspoken Finance\nMinister Purbaya Yudhi Sadewa on September 14, exactly one year after\nappointing him to take over from globally respected finance chief Sri\nMulyani Indrawati.<\/p>\n
He was replaced by Deputy Finance Minister Suahasil Nazara, a widely\nrespected former aide to Sri Mulyani.<\/p>\n
The move came as tensions were growing over state revenues and the\ngovernment\u2019s relationship with Danantara, Indonesia\u2019s powerful sovereign\ninvestment authority.<\/p>\n
Prabowo\u2019s government is facing mounting criticism over fiscal\nstability and costly flagship programs, including the corruption- and\nquality-plagued free lunch initiative and the establishment of tens of\nthousands of village cooperatives.<\/p>\n
Investors have grown cautious, the rupiah has been hit hard this year\nand the stock market has suffered losses over the integrity and\ntransparency of the bourse.<\/p>\n
Several polls have pointed to a sharp decline in public satisfaction\nwith the government. A Tempo Data Science survey conducted from July 31\nto Aug.\u00a011 found that 62 percent of respondents were dissatisfied with\ngovernment performance. The speed of the decline is striking: in the\nsame survey, satisfaction stood at 75 percent in December 2025.<\/p>\n
A separate poll by the respected Saiful Mujani Research and\nConsulting (SMRC) showed Prabowo with an approval rating of 51.1 percent\nin July, down from 81.2 percent a year earlier. Indonesia traditionally\ngives its leaders very high approval ratings, which makes this decline\nsobering.<\/p>\n
The government\u2019s declining support is beginning to test a more\nconsequential asset: its performance-based legitimacy.<\/p>\n
A fight over Rp120 trillion<\/p>\n
Purbaya\u2019s dismissal is widely believed to be linked to internal\ntensions and growing dissatisfaction within the presidential palace over\nthe management of state revenues and the Finance Ministry\u2019s relationship\nwith Danantara, the powerful asset fund that Prabowo put in charge of\nall state-owned companies in 2025.<\/p>\n
Danantara was launched with the promise that it would manage and\ninvest the assets of all 1000 or so SOEs and thereby propel the country\nto higher growth. Purbaya turned that on its head last week, when he\nsaid about Rp120 trillion ($7.1 billion) from Danantara\u2019s SOE revenues\nwould go to the state budget. The money was intended to be recorded as\nnon-tax state revenue and used as a fiscal buffer.<\/p>\n
Purbaya said the payment had effectively been agreed upon and that\nthe amount reflected a commitment made by Danantara\u2019s leadership to\nPrabowo. But days before his removal, he publicly acknowledged\nresistance from Danantara, saying the agency had questioned the proposed\npayment.<\/p>\n
The episode fueled speculation that Prabowo was unhappy with the\ncommunication and coordination between the Finance Ministry and\nDanantara over the effort to secure the funds. Purbaya had also been\nembroiled in a dispute with Bank Indonesia, the central bank, which\nculminated in the resignation of its governor, Perry Warjiyo.<\/p>\n
Danantara\u2019s head and concurrent Investment Minister Rosan Roeslani,\nwho is very close to Prabowo, is said to have been surprised by the\nannouncement.<\/p>\n
The government\u2019s apparent decision to draw $7.1 billion from\nDanantara\u2019s profits so soon after its creation has raised questions\nabout whether the authority is being treated as an investment\ninstitution or a source of budget financing. The issue is clouded by the\nfact that Danantara itself has yet to issue a financial statement for\n2025, a fact that contributes to investor skepticism.<\/p>\n
Where is the money?<\/p>\n
The government is under pressure to find additional fiscal room as\nnon-tax revenue is expected to weaken in 2027, partly because of lower\nassumptions for commodity prices. At the same time, spending demands\nremain high. That makes Danantara\u2019s profits an attractive source of cash\n\u2014 but one that may come at the expense of its ability to invest.<\/p>\n
Bhima Yudhistira, an economist and executive director of the Center\nof Economic and Law Studies (Celios), said internal coordination\nproblems may have contributed to the dismissal. Bhima pointed to\ntensions between the Directorate General of Customs and Excise and the\nDirectorate General of Taxes, including disputes over the replacement of\nsenior officials and the policy of withholding tax refunds from\ncompanies.<\/p>\n
He said a policy to withhold tax refunds was initially intended to\nallow the government to scrutinize companies in the natural resources\nsector. But the policy was later expanded to other industries,\ntriggering dissatisfaction among businesses. The broader application of\nthe policy, Bhima said, contributed to differences between Purbaya and\nBimo Wijayanto, the director general of taxes.<\/p>\n
The tensions went beyond taxation to the promised $7.1 billion\ndividend payment from Danantara to the Finance Ministry.<\/p>\n
Taken together, Bhima said, the disputes pointed to poor internal\ncoordination under Purbaya. He said the minister\u2019s increasingly\noverconfident leadership style and public communications had aggravated\nthe problems. In short, Purbaya is boastful and relishes attracting\ncontroversy.<\/p>\n
\u201cPurbaya\u2019s way of coordinating internally, including his\ncommunication style, became increasingly problematic and overconfident,\u201d\nBhima said. \u201cThat is what ultimately led to his reshuffle.\u201d<\/p>\n
Purbaya was sworn in on September 8, 2025, replacing Sri Mulyani, who\nhad served under three presidents and is a former Managing Director of\nthe World Bank. During his year at the Finance Ministry, he replaced Sri\nMulyani\u2019s caution with a more interventionist approach to fiscal policy,\nincluding the controversial placement of Rp200 trillion in government\nreserve funds at five state-owned commercial banks in September 2025 to\nspur lending.<\/p>\n
See related story:<\/p>\n
Economic growth also accelerated during his tenure, although it\nremained below the government\u2019s 6 percent target. GDP grew 5.39 percent\nin the fourth quarter of 2025 and 5.61 percent in the first quarter of\n2026, before slowing to 5.29 percent in the second quarter. Some\neconomists have questioned the quality of that growth, arguing that\ngovernment spending, rather than stronger household and private-sector\nactivity, is driving the economy.<\/p>\n
A familiar face<\/p>\n
The appointment of Suahasil could be reassuring. Suahasil said the\npresident had instructed him to maintain the health and credibility of\nthe country\u2019s finances and to improve public communication about fiscal\npolicy.<\/p>\n
\u201cThe state budget must be healthy. It must also be credible and\ntrusted,\u201d Suahasil said after his inauguration as quoted by local\nmedia.<\/p>\n
He played down the prospect of any major change in economic policy,\ndescribing his appointment as a continuation rather than a break with\nthe ministry\u2019s existing direction.<\/p>\n
\u201cThe market has its own logic,\u201d he said. \u201cBut in my view, this is not\na change. It is a continuation.\u201d<\/p>\n
Suahasil served as head of the Fiscal Policy Agency from 2016 to 2017\nand has been deputy finance minister since 2019, working alongside Sri\nMulyani in formulating and implementing national fiscal policy.<\/p>\n
He has a master\u2019s degree from Cornell University and a doctorate in\neconomics from the University of Illinois. Before joining the ministry,\nhe held several public-policy positions, including work on fiscal\ndecentralization and poverty-reduction programs.<\/p>\n
His appointment may provide continuity, but the central fiscal\ndilemma facing the government remains unchanged: how to finance an\nambitious spending agenda without weakening the institutions and\ninvestment capacity that are supposed to generate Indonesia\u2019s future\ngrowth.<\/p>\n
Ainur Rohmah is a freelance journalist and regular contributor to\nAsia Sentinel.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesia-finance-minister-firing-exposes-policy-disarray-1789469418", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }