Indonesia’s new Finance Minister pledges liquidity measures with Central Bank
Indonesia’s newly appointed finance minister, Purbaya Yudhi Sadewa, said on Tuesday he would coordinate with the central bank to ease liquidity in financial markets in a bid to spur economic activity and accelerate government programs.
After his first cabinet meeting with President Prabowo Subianto, Purbaya also pledged to respect Indonesia’s fiscal rules, including the cap on budget deficits at 3% of GDP, News.Az reports, citing Reuters.
“I have discussed with the central bank … and with the president’s permission, we will take significant short-term measures to ease liquidity,” he told reporters.
Purbaya replaces long-serving minister Sri Mulyani Indrawati, whose abrupt dismissal on Monday rattled investors, raising concerns over the erosion of Indonesia’s fiscal credibility under Prabowo’s ambitious and costly social spending plans.
The Jakarta Composite Index extended its losses, falling 1.8% on Tuesday after Monday’s sharp drop. International bonds weakened, rupiah-denominated bond yields climbed, and the rupiah fell 1% against the U.S. dollar, prompting intervention from the central bank.
“[Sri Mulyani] was the safeguard of prudent fiscal policy,” said Hasnain Malik, strategist at Tellimer. “Her departure will stir fears of widening deficits under an unconstrained and under-pressure Prabowo.”
More than 380 economists issued a joint statement urging structural reforms to address inequality, which they identified as a driver of ongoing nationwide protests. They called for cuts to populist programs, deregulation to improve the investment climate, and reduced government interference in institutions such as the central bank.
Protests, which began in late August over large allowances for lawmakers, have since expanded to include grievances about spending mismanagement and alleged police abuses. On Tuesday, several hundred students demonstrated outside parliament, demanding the release of detained protesters and activists.
At a handover ceremony earlier in the day, Purbaya acknowledged the challenges ahead amid global economic uncertainty. Outgoing minister Sri Mulyani, widely respected by investors, bid farewell with humility.
“Nobody’s perfect. When one does their job, there are shortcomings … I humbly apologise,” she said.
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