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Anand Mathai

Bloomberg

Indonesian President Prabowo Subianto removed Finance Minister Sri Mulyani Indrawati from her post, risking renewed financial turmoil for Southeast Asia’s biggest economy following days of violent protests against his administration.
Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, was sworn in as the new finance minister by Prabowo late on Monday.
Rumours that Prabowo could replace Sri Mulyani led the benchmark stock index to pare early gains to close 1.3 per cent lower ahead of the announcement.
While Sri Mulyani’s house was sacked during recent nationwide protests over perks for elites, she enjoys widespread respect among international investors.
“There’s definitely a risk of capital flight now as international investors will be spooked in terms of what the fiscal outlook now looks like,” said Michael Brown, senior research strategist at Pepperstone Research in London. “IDR NDFs are already trading pretty soft on the headline and you’d expect that to continue.”
The offshore rupiah one-month non-deliverable forward extended losses after Sri Mulyani’s removal was confirmed, trading 0.7 per cent lower at 16,516 per dollar after being up as much as 0.6 per cent earlier. PT Bank Central Asia and PT Bank Mandiri Persero led stock declines.

Sri Mulyani had led Indonesia’s finance ministry for nearly 14 of the last 20 years, a symbol of fiscal credibility for three presidents, who is widely credited for helping the nation secure investment-grade credit ratings.
The former World Bank executive was first appointed by ex-president Susilo Bambang Yudhoyono in 2005, and then by president Joko Widodo in 2016. Last October, Prabowo retained her in the post.
Rumours of Sri Mulyani’s intention to leave government had surfaced repeatedly over the years and were most recently denied by officials in March, when the palace dismissed reports of her resignation as a “hoax”. Similar claims had been aired during Widodo’s administration, with some sources suggesting she had grown increasingly disillusioned with politically driven spending.
Wasisto Raharjo Jati, a political sociologist at Indonesia’s National Research and Innovation Agency, said the moment had finally arrived.
“Sri Mulyani’s resignation gained momentum after her desire to step down was rejected in the last two administrations,” he said.
“I think she has carried too much of the burden as finance minister, especially as the state budget has become increasingly imbalanced due to populist policies under [Widodo] and now Prabowo.”
The move caps days of speculation in financial markets after Sri Mulyani’s home was among those looted by a mob at the height of protests in late August. Hundreds of demonstrations have taken place across 35 provinces, leaving at least 10 dead and several government buildings and public facilities burned.

“Mulyani’s departure, though not unexpected after recent unrest, marks the end of an era of fiscal credibility,” said Mohit Mirpuri, a senior partner at SGMC Capital Pte.
But she had left “strong foundations”, he said, with Indonesia able to tap “experienced technocrats” like Purbaya. “Overall, the transition should be manageable, with policy continuity the key to restoring confidence.”
Her successor has served as a deputy at the Coordinating Ministry for Maritime Affairs and Investment. Before joining the government, Purbaya was an economist in the early 2000s who worked at the Danareksa Research Institute and became president director of PT Danareksa Securities.
In a briefing late on Monday, Purbaya said he had extensive experience in markets, and in providing fiscal advice to the government. He added that he would talk to Sri Mulyani as the government looked to optimise the effect of its spending on the economy.
Indonesia’s fiscal rules cap the budget deficit at 3 per cent of GDP, but that ceiling has come under strain from subsidy-heavy initiatives. The 2026 budget includes politically popular items such as energy subsidies and Prabowo’s flagship free school meals programme.
Asked whether Sri Mulyani’s departure might allay the anger of protestors, Wasisto expressed scepticism since it did not provide a solution to their concerns.
“Her removal does not answer the current economic downturn,” Wasisto said. “Whoever holds the post will face the same dilemma – how to reconcile the state budget with populist policies when the 2026 budget has been driven by politics rather than technocratic works.”

Bhima Yudhistira, executive director of the Centre of Economic and Law Studies, said while Sri Mulyani faced criticism over tax ratios, debt levels and efficiency measures, her successor “does not appear to have sufficiently progressive tax policies” either.
“His school of toughness is not much different from Sri Mulyani’s, so it is suspected he will use the same playbook.”
He also warned that Purbaya could revive the controversial “burden sharing” scheme with Bank Indonesia – a policy under which the central bank directly finances government spending – “to ensure Prabowo’s ambitious programmes continue”, Bhima said.
Asked how the new finance minister could show he was listening to public demands, Bhima said the clearest signal would be real tax reforms that protected the middle class and lower-income groups, including “lowering VAT to 8 per cent and raising the non-taxable income threshold to 7 million rupiah per month”.
He also urged a shift towards progressive revenue measures such as a “2 per cent wealth tax” and windfall taxes on coal and other high-revenue sectors.


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Indonesia removes finance minister Sri Mulyani after protests

Indonesian Finance Minister Sri Mulyani stands during a cabinet inauguration ceremony at Merdeka Palace in Jakarta on October 21, 2024. Photo: EPA-EFE

Indonesia’s newly appointed Finance Minister Purbaya Yudhi Sadewa waves to journalists following his inauguration at the presidential palace in Jakarta on Monday. Photo: Reuters

Workers wearing masks depicting Indonesian Finance Minister Sri Mulyani take part in a protest in Surabaya on August 28. Photo: AFP

People at a clothing market in Banda Aceh, Indonesia, on September 1. Indonesia’s fiscal rules cap the budget deficit at 3 per cent of GDP. Photo: EPA

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Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, has been sworn in as the new finance chief


Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, has been sworn in as the new finance chief.


Indonesia removes finance minister Sri Mulyani after protests

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, has been sworn in as the new finance chief

Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, has been sworn in as the new finance chief