Arya News - Suahasil Nazara, former deputy finance minister, pledged after his inauguration to maintain a “healthy and credible” state budget.
JAKARTA – President Prabowo Subianto ousted Finance Minister Purbaya Yudhi Sadewa in a latest cabinet reshuffle on Monday and appointed Deputy Finance Minister Suahasil Nazara as his replacement, putting a familiar hand as the government faces mounting pressure to balance ambitious growth plans with tighter fiscal space.
The abrupt change comes after the government unveiled its 2027 state budget bill in August and just weeks before lawmakers are expected to pass it into law.
It also marks Prabowo’s second change of finance minister since taking office in October 2024. In September 2025, the President picked Purbaya to fill the shoes of Sri Mulyani Indrawati, the second-longest-serving finance minister, who resigned after two weeks of violent protests and unrest across the country.
Purbaya’s exactly one-year tenure was marked by a series of economic shocks, including a sharp fall in the rupiah and a ballooning fiscal deficit.
His first policy after taking office, injecting quick liquidity from the budget surplus balance (SAL) into state-owned banks to boost liquidity and economic growth, drew criticism from lawmakers and created friction with Bank Indonesia.
The outspoken minister’s latest rift involved his push for state asset fund Danantara to remit Rp 120 trillion (US$6.8 billion) in state-owned enterprise dividends to the state budget this year as fiscal buffer, insisting the transfer should proceed in line with Prabowo’s instructions despite objections from the fund.
Purbaya also replaced hundreds of finance ministry officials on Thursday, just days before his own replacement, saying the changes were needed to ensure the ministry keeps moving, adapting and improving.
Familiar face in charge
A seasoned economist, Suahasil by contrast brings deep institutional experience to the ministry. Among many roles in the government, he joined the finance ministry’s advisory team in 2009, headed the Fiscal Policy Agency (BKF) from 2015 and became deputy minister in 2019, giving him a long track record of involvement in state budget formulation and fiscal policymaking.
Suahasil, 55, pledged after his inauguration to maintain a “healthy and credible” state budget.
His immediate priority will be to maintain a credible budget, communicate fiscal policy clearly to the public and ensure spending will support the government’s priority programs under its national priority work program (PKPN), he said.
“The state budget must be able to carry out the government’s priority programs. Therefore, the budget must be healthy, must be credible, […] must be reliable,” he continued, adding that the fiscal deficit would continue to be kept below the legal cap of 3 percent.
The government projected a fiscal deficit of 2.85 percent of GDP by the end of this year, equivalent to Rp 734.3 trillion (US$41.3 billion).
Suahasil emphasized continuity in fiscal policy and described the transition as “business as usual,” while promising to improve spending quality and ensure government expenditure produce effective outcomes aligned with national priorities.
The new finance minister also faces the immediate task of shaping the final 2027 budget, saying the remaining weeks of September would be used to organize government priority programs that would receive funding.
Suahasil revealed that he had only been called by the State Palace on Monday morning and was told to prepare for his inauguration later in the day. Purbaya, meanwhile, was seen leaving in the middle of a Regional Representative Council (DPD) hearing earlier in the day.
In response to Purbaya’s departure, the Indonesia Stock Exchange (IDX) composite rose 3.29 percent to finish the day at 6,534.69, after dropping 2.5 percent along the day.
Meanwhile, the rupiah strengthened 0.11 percent in late trading to Rp 17,656 per US dollar.
Suahasil’s long-standing role at the ministry could help limit transition risk, while his technocratic background should provide institutional continuity in managing the state budget, Bank Danamon lead economist Faiz Irman wrote in an analysis on Monday.
The management of SAL would be a key near-term test with any withdrawal of funds from state-owned banks needing to be gradual and coordinated with the central bank, he said.
The key challenges ahead are businesses’ liquidity constraints and the government’s need to balance its ambitious growth agenda against increasingly limited fiscal space, BCA chief economist David Sumual told The Jakarta Post on Monday.
Higher global oil prices are another risk, he added, as rising fuel costs could stoke inflation and increase the fiscal burden of keeping domestic fuel prices unchanged.
“If there is no change in policy, fiscal pressure will increase, which could push up bond yields and borrowing costs and result in a larger budget deficit than currently projected,” he said.
David also urged Suahasil to immediately tell the President the hard truths, if any, about priority programs or policies to avoid the worst-case scenario.
“To put it bluntly, if something needs to be cut, then cut it. That’s the Finance Minister’s job,” he added.
Samuel Sekuritas Indonesia research managing director Harry Su said Suahasil’s appointment could help restore market confidence and stabilize macro-fiscal management as tensions grow over revenue targets, budget execution and Danantara’s contribution to the state budget.
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