Purbaya: Negative Market Sentiment Must Be Rectified Immediately

Finance Minister Purbaya Yudhi Sadewa has affirmed that the government is continuously striving to improve the negative sentiment developing in financial markets amid the weakening rupiah exchange rate and the composite stock price index (IHSG). He stated that the pressure in the market does not reflect Indonesia’s fundamental economic and fiscal conditions, which remain well maintained. The IHSG closed 4.2 per cent lower at 5,594.765 on Friday. Meanwhile, the rupiah exchange rate in early trading weakened by 17 points, or 0.09 per cent, to Rp18,049 per US dollar. “The negative sentiment in the market must be rectified,” Purbaya said during the APBN KiTa press conference in Jakarta.

Purbaya assessed that the market weakening was influenced by a misconception among market participants and analysts regarding the direction of the government’s fiscal policy. He noted a perception that the government is running its fiscal policy carelessly, whereas President Prabowo Subianto is committed to keeping the budget deficit below the 3 per cent threshold against gross domestic product (GDP). “There is a misconception from the market or analysts who think we are running the fiscal policy poorly,” he said.

He explained that Indonesia’s economic foundation currently remains strong. The government, he said, has room to make policy adjustments if necessary to maintain fiscal health without sacrificing economic growth. “I am explaining now that the economic foundation is good, and policies are truly well maintained. If anything happens, we can adjust, we can fix it, we are flexible in ensuring the deficit stays below 3 per cent without disrupting the economy,” he stated. Purbaya stressed that President Prabowo has an extremely strong commitment to maintaining fiscal discipline. In various internal discussions, the President is said to have consistently emphasised the importance of keeping the budget deficit under control. “So the President’s commitment to keeping the fiscal below 3 per cent is extremely strong. Hence, we are not running an imprudent fiscal policy,” he asserted.

According to Purbaya, the government’s main challenge currently lies in communication with the public and investors. He acknowledged that various positive fiscal developments have not yet been fully conveyed to the market effectively. He added that the government understands the various dynamics occurring in the market. However, he believes that a healthy fiscal condition should be a supporting factor for rupiah exchange rate stability and investor confidence. “We know what we are doing. If we sort out that side, the rupiah should follow suit. But indeed, there is negative sentiment in the market that we must rectify,” he said.

Purbaya also dismissed notions that fiscal management is being conducted haphazardly or without mature planning. “There is a misconception that fiscal policy is run in a scattergun manner because the minister does not understand fiscal matters. That is not the case,” he stressed. According to him, the government had from the outset anticipated the pattern of the state budget deficit movement, which had widened earlier in the year due to accelerated state spending. However, over time, fiscal performance has shown improvement in line with planning. “In fact, the fiscal position is good,” he noted. He affirmed that the government will continue to prepare various stimulus measures and engage in dialogue with the business community if necessary to maintain the momentum of national economic growth.