Indonesia’s financial markets reacted sharply to the appointment of Purbaya Yudhi Sadewa as Finance Minister, with the stock index falling nearly 2% amid investor uncertainty. In response, Purbaya pledged to maintain prudent fiscal policies and optimize existing frameworks to restore confidence. His leadership marks a pivotal moment for Indonesia’s economic direction as it navigates growth ambitions and fiscal discipline.
Key Facts & Background:
- Purbaya Yudhi Sadewa was appointed Finance Minister on September 8, 2025, replacing Sri Mulyani Indrawati.
- On September 9, the Jakarta Composite Index (IHSG) dropped 1.78% to 7,628.60 following the announcement.
- The rupiah also weakened over 1% against the US dollar, prompting Bank Indonesia to intervene.
- Purbaya stated he will not introduce “strange” fiscal policies and will continue consulting with Sri Mulyani.
- His focus includes optimizing existing fiscal tools to accelerate economic growth and improve liquidity.
- President Prabowo has tasked Purbaya with boosting growth to 8% within his first 100 working days.
- Market concerns center on potential shifts toward populist spending and erosion of fiscal credibility.
Strategic Insights: Purbaya’s appointment signals a delicate balancing act between continuity and reform. While his pledge to uphold fiscal prudence aims to reassure investors, the abrupt departure of Sri Mulyani—widely respected for her discipline—has raised questions about long-term policy direction. The market’s reaction underscores the importance of credibility in fiscal governance, especially amid global economic uncertainty. Purbaya’s challenge lies in delivering growth without compromising budget targets, particularly as Indonesia pursues expansive welfare programs. His decision to maintain dialogue with Sri Mulyani suggests a pragmatic approach, but sustained investor confidence will depend on transparent execution and clear revenue strategies. In the months ahead, fiscal clarity and responsiveness will be critical to stabilizing sentiment and reinforcing Indonesia’s macroeconomic resilience.