Indonesia appoints Suahasil Nazara as new finance minister
Indonesian President Prabowo Subianto dismissed Finance Minister Purbaya Yudhi Sadewa and appointed his deputy, Suahasil Nazara, as the new head of the ministry. As CNBC Top News reports, Nazara was sworn in several hours after his predecessor was dismissed. He became Indonesia's third finance minister in two years.
Nazara served as deputy finance minister for seven years and headed the ministry's fiscal policy agency from 2015 to 2019. Qi Han Tay, a senior analyst at the Economist Intelligence Unit, called him a well-known technocrat with extensive experience at the finance ministry. According to the analyst, this reduces transition-period risks, as the new minister is already familiar with budget mechanisms.
Challenges for the budget
Indonesia's economy has come under pressure this year due to the energy crisis caused by the war in Iran and limited budget capacity. Rising spending on energy subsidies forced the authorities to cut funding for key programs.
Indonesia's stock index has lost more than 25% since the beginning of the year, while the rupiah fell to a record low in June. At the same time, tighter budget discipline over the past month has helped stabilize market sentiment. On Wednesday, the exchange rate stood at 17,680 rupiah per U.S. dollar.
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Indonesia's state budget deficit is expected to increase to 2.85% of GDP in 2026. In his first statements after taking office, Nazara promised to maintain confidence in the budget and keep the deficit below 3% of GDP.
Central bank independence
The personnel changes came several weeks after the sudden resignation of Bank Indonesia Governor Perry Warjiyo. This increased attention to the extent of President Prabowo's control over the country's fiscal and monetary policy.
Gareth Leather, a senior economist at Capital Economics, called Nazara's appointment a positive step, but noted that further evidence is needed to conclude that economic policy has changed. According to Qi Han Tay, the first important signal will be the 2027 budget, particularly decisions on spending, revenue forecasts, and the deficit.
