Minister of Finance Suahasil Nazara gave a welcome speech after being sworn in as Minister of Finance at the Ministry of Finance in Jakarta, on September 14, 2026.
Faisal Ramadhan Nurphoto Getty Images
Indonesia just got its third finance minister in two years, drawing attention to concerns plaguing Southeast Asia’s largest economy, with analysts citing the need for fiscal prudence and a shift away from “interventionist” policies.
President Prabowo Subianto fired Finance Minister Purbaya Yudhi Sadewa on Monday and replaced him with his deputy Suahasil Nazara.
The reshuffle comes weeks after Bank Indonesia Governor Perry Warjiyo abruptly resigned, intensifying scrutiny over how much control Prabowo now wields over fiscal and monetary policy.
For investors, elevating the technocrat is known to restore confidence, after a combative year in Purbaya that saw credit-rating outlooks cut and the currency down to the lowest in history this year.
Nazara, sworn in hours after Purbaya’s dismissal, spent seven years as deputy finance minister and headed the ministry’s fiscal policy agency from 2015 to 2019.
“He is a well-known technocrat with deep experience in the Ministry of Finance and ties to the Sri Mulyani era,” said Qi Hang Tay, a senior Asia analyst at the Economist Intelligence Unit. The internal pedigree “lowers the transition risk” because they already know the budget machine, Tay said.
Gareth Leather, senior Asia economist at Capital Economics, described it as a “welcome development,” although more evidence of improvements in policy-making will be needed to conclude that Indonesia “has actually turned a corner.”
Indonesia’s economy has been under pressure this year, due to an energy crisis led by the Iran war and mounting fiscal constraints. Rising energy costs raise subsidy costs, forcing cuts to key programs. The market has reacted badly, with the benchmark index losing more than 25% this year, and the currency hitting a record high in June.
The subsequent pivot to fiscal discipline, however, has helped stabilize sentiment over the past month.
The rupiah has strengthened, and on Wednesday it was at 17,680 per dollar. DBS Bank economist Radhika Rao expects the currency to trade in a range of 17,600 to 17,800 close, with fiscal credibility supporting the bond market and supporting the currency.
The country’s fiscal deficit is expected to exceed 2.85% of GDP in 2026, with Purbaya’s 1-year term marked by credit outlook downgrades from Fitch and Moody’s due to policy uncertainty, even as the country’s growth rises to a three-year high.
“The new finance minister should be more clear about his priorities and give investors a more consistent signal on fiscal policy,” Kulit said. “The early signs are encouraging,” he said, while Nazara, in his first speech as minister, vowed to maintain the credibility of the budget and promised to keep the deficit below 3% of GDP.
“The main obstacle is that Nazara has to finance Prabowo’s expensive growth agenda with increasingly limited fiscal space,” Tay said, looking forward to a less expansionary fiscal policy and better relations with Bank Indonesia.
Moving away from ‘interventionist policy-making’
The appointment follows a string of moves suggesting Indonesia can slowly move away from “more populist and interventionist policymaking that has characterized Prabowo’s presidency so far,” Kulit said.
But not everyone is reading the appointment as a guarantee, as the leadership reshuffle has come amid growing unease over the central bank’s autonomy.
Prabowo’s nephew, Thomas Djiwandono, was appointed deputy governor in February, months before Warjiyo resigned in July. Parliament elected senior deputy governor Destry Damayanti as the first female governor of Bank Indonesia on September 1.
Joshua Kurlantzick, a senior fellow at the Council on Foreign Relations, described the elevation of Nazara as “more, and worrisome, a sign of the consolidation of economic power in the hands of Prabowo,” stressing concerns about the independence of Bank Indonesia.
The 2027 budget will provide an early indication of whether Nazara can make changes in policy making, according to EIU’s Tay, based on its decisions related to fiscal spending, revenue assumptions and deficits.
On the monetary side, a clearer separation between fiscal policy and the central bank will be another important signal, Tay said, especially if the government stops supporting Bank Indonesia to support growth or absorb the funding burden.
Tay said the test will be whether Nazara trims or delays programs that have so far failed to deliver economic growth faster than the costs. “If they do it while protecting their fiscal credibility, then there will be genuine change,” he said. “But if ambitious spending remains unchanged and adjustments are mostly rhetoric, it will look like business as usual.”