A Nation Holds Its Breath as Indonesia Swaps Fiscal Minds

Indonesian President Prabowo Subianto has replaced Finance Minister Sri Mulyani Indrawati with Purbaya Yudhi Sadewa in a major cabinet reshuffle, raising concerns over the continuity of economic reforms and fiscal discipline. The change, announced on September 8, 2025, followed weeks of social unrest and protests against rising government spending on legislative allowances and broader fiscal policies. Sri Mulyani, a three-term finance minister known for steering Indonesia through global crises with disciplined fiscal management, was succeeded by Sadewa, an economist and former head of the Indonesia Deposit Insurance Corporation [1].

The reshuffle was accompanied by changes in several other key ministries, including the Ministry of Migrant Workers Protection, the Ministry of Cooperatives, and the Ministry of Youth and Sports. Notably, Prabowo also introduced a new Ministry of Haj and Umroh, with Mochammad Irfan Yusuf as its first minister. The broader cabinet, known as the Red and White Cabinet, now consists of 109 officials, including ministers, vice-ministers, and heads of state agencies [1].

Sri Mulyani’s departure has triggered immediate market reactions. The Jakarta Composite Index fell by 1.3% in response to the news, while the rupiah initially strengthened by 0.7% against the U.S. dollar. However, Indonesia’s long-dated sovereign bonds fell, reflecting investor uncertainty about the new administration’s economic priorities [2]. Analysts suggest the change may signal a shift in fiscal strategy, particularly in light of Prabowo’s ambitious social spending programs, including the controversial free meals initiative targeting over 80 million people, which has faced logistical and financial challenges [2].

Purbaya Yudhi Sadewa, the new finance minister, has pledged to pursue an 8% economic growth target and emphasized the need for collaboration between the public and private sectors. He has also ruled out the introduction of new taxes, a stance that aligns with Prabowo’s broader political messaging. However, some economists have expressed concerns over Sadewa’s limited hands-on experience in managing national fiscal policy, despite his academic credentials and prior roles in state institutions [2].

The timing of the reshuffle coincides with ongoing nationwide protests, which began in late August over legislative pay raises and broader governance issues. The protests have intensified scrutiny of the government’s economic direction and highlighted public dissatisfaction with rising inequality and bureaucratic inefficiencies. As the new finance minister prepares to roll out policies, he faces the dual challenge of addressing these social grievances while maintaining macroeconomic stability [2].

The transition marks a pivotal moment for Indonesia’s economic trajectory. With the outgoing finance minister widely credited for maintaining fiscal discipline and navigating through global economic shocks, the new administration’s approach will be closely watched by both domestic stakeholders and international investors. The success of the reshuffle will largely depend on the new cabinet’s ability to implement effective policies while preserving the confidence of the financial markets [3].

Source:

[1] title1 (https://global.chinadaily.com.cn/a/202509/08/WS68becbf1a3108622abc9f850.html)

[2] title2 (https://www.globalbankingandfinance.com/INDONESIA-POLITICS-RESHUFFLE-0e5160af-4e61-43b1-b4a9-3385d8732d83)

[3] title3 (https://finimize.com/content/indonesia-ousts-top-finance-chief-markets-react-swiftly)