Purbaya Brings New Optimism
Key Takeaways
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JAKARTA, Investortrust.id — Finance Minister Purbaya Yudhi Sadewa has brought a wave of new optimism. His first policies quickly convinced business leaders and market players that he understands both the country’s economic ailments and the right prescriptions to treat them.
Like a skilled doctor who can diagnose illness with precision, Purbaya identified the weaknesses in Indonesia’s economy and immediately offered therapy to revive national growth and accelerate inclusive expansion toward the ambitious 8% target, which he believes can be achieved by 2030 at the latest.
President Prabowo Subianto made the right choice in appointing him. The Finance Minister is a highly strategic position, reporting directly to the President, with policies that shape the very pulse of the national economy.
At a time when Indonesia faces growing global headwinds, this office must be entrusted to someone with deep expertise in economics and finance and the proven experience to apply that knowledge in practice. Purbaya meets that test. He is not a celebrity economist seeking popularity but a research-driven economist who works with data, analysis, and policy substance.
Among his first and most important policies was the decision to reallocate Rp 200 trillion, equal to $13.6 billion, from the Rp 425 trillion that the government had previously parked at Bank Indonesia. Instead of lying idle and earning minimal returns, the funds were placed into the commercial banking system to strengthen liquidity.
From there, they are to be directed into the real economy, particularly productive sectors such as manufacturing and industry. For years, Indonesia’s growth had been stuck at around 5%, hampered largely by what Purbaya described as a “drought” of liquidity that stifled credit and investment.
Injecting Liquidity
By flooding the banking system with liquidity, Finance Minister Purbaya aims to give banks the strength to expand lending. As a research economist, he refuses to be trapped in the familiar “chicken-and-egg” debate about which comes first — demand or investment.
In his view, the economy must be energized through investment, and investment requires fresh capital. With sufficient funds, banks will take a more expansionary stance, channeling credit particularly into productive sectors. From large corporations down to micro, small, and medium enterprises — including ultra-micro businesses — all would be able to move forward.
Bank liquidity, he stressed, is the very core of overall economic liquidity. Banks are like the arteries that circulate money throughout every sector of the economy. When those arteries are clogged and banks lack funds, the entire economy suffers from a drought of liquidity.
Conversely, when bank liquidity is abundant and healthy, the economy circulates more smoothly, growth accelerates, and jobs are created. This is, broadly, the “new path” Finance Minister Purbaya has chosen — and it is precisely the path President Prabowo wants to pursue.
Before Commission XI of the House of Representatives on Wednesday, Sept. 10, 2025, Finance Minister Purbaya explained that the government was withdrawing funds parked at Bank Indonesia to address an economy that was “choking” from a shortage of liquidity.
The step, he said, was essential to ensure banks had enough resources to keep the domestic economic engine running at full capacity. “Over the past year people have found it difficult to get jobs and other opportunities because of policy mistakes,” he told lawmakers.
On Thursday evening, Sept. 11, 2025, Purbaya signed the transfer of Rp 200 trillion, equal to $13.6 billion, which had been idle at Bank Indonesia. The funds were moved into five state-owned banks: PT Bank Rakyat Indonesia Tbk (BRI), PT Bank Mandiri Tbk, PT Bank Negara Indonesia Tbk (BNI), PT Bank Tabungan Negara Tbk (BTN), and PT Bank Syariah Indonesia Tbk (BSI).
By Friday, Sept. 12, the five lenders began receiving the promised injections. BRI, Mandiri, and BNI each received Rp 55 trillion. BTN was allocated Rp 25 trillion, and BSI Rp 10 trillion.
Finance Ministry data showed that in December 2024, government deposits at Bank Indonesia reached Rp 495 trillion, while deposits in commercial banks totaled Rp 319 trillion. By June 2025, the balance had shifted to Rp 428 trillion at the central bank and Rp 394 trillion in banks.
Most recently, government funds held at Bank Indonesia stood at around Rp 425 trillion. The deposits came from excess budget balances (SAL) and unspent financing proceeds (SiLPA). Purbaya noted that reallocating these funds did not require a new ministerial decree.
He emphasized that the buildup of idle deposits was not only the responsibility of the previous government but also the result of central bank policy. Bank Indonesia had offered Bank Indonesia Rupiah Securities (SRBI) with high coupon rates above the benchmark, which attracted idle government and banking funds.
At the same time, the central bank absorbed liquidity through strict reserve requirements: 8% of third-party funds for primary reserves and 2.5% for secondary reserves, or about 10.5% in total. With Rp 9,300 trillion in deposits, more than Rp 970 trillion of banking liquidity was effectively parked at Bank Indonesia.
Purbaya argued that cutting interest rates alone would mean little if banks lacked liquidity because deposits were continuously drained by the central bank. The liquidity drought, he warned, would only intensify if both central and regional governments continued to park their funds at Bank Indonesia.
“I will remind Bank Indonesia not to absorb again the funds already withdrawn by the government. I will also remind regional governments not to use transfer funds to buy securities,” he said.
According to Purbaya, Indonesia’s growth had been stuck at around 5% largely because it was sustained only by government spending. In reality, the economy was driven mainly by household consumption and investment, which together accounted for nearly 90% of GDP. The stagnation, he insisted, was not solely the result of global headwinds but also of misguided domestic policy choices.
The impact of tight liquidity had been severe. From mid-2023 until early in the second half of 2024, Bank Indonesia continuously absorbed money, slowing the economy and hurting the real sector. “That is when the tagline ‘Indonesia in the dark’ emerged. We all blamed global conditions, but in fact there were also mistakes in domestic policy. Because 90% of our economy is driven by domestic demand,” he explained.
He contrasted this with the administration of President Susilo Bambang Yudhoyono, when growth had at times exceeded 6% thanks in part to ample liquidity. Base money — cash in circulation — grew as much as 17%, while credit growth peaked at 22%. Under President Joko Widodo, however, base money expanded by only about 7% annually, and bank credit growth was mostly in single digits.
As coordinator of the Financial System Stability Committee (KSSK) — which includes the Finance Minister, the Governor of Bank Indonesia, the Chairman of the Financial Services Authority (OJK), and the head of the Deposit Insurance Corporation (LPS) — Purbaya said he would maximize both fiscal and monetary engines to drive inclusive growth. The committee is collectively responsible for safeguarding Indonesia’s financial stability.
Purbaya expressed confidence that the injection of liquidity would not trigger runaway inflation. He explained that the Finance Ministry would continue to coordinate closely with Bank Indonesia to monitor any effects on inflation and the rupiah exchange rate. The key, he stressed, was that the funds were being directed into productive sectors rather than into consumption, which could create demand-pull pressures.
Indonesia, he argued, still had vast economic room to expand. “We will channel these resources to productive industries, not to consumer spending that could overheat demand,” he said. With that approach, he projected GDP growth to rise above 6% in 2026 while inflation would remain moderate at around 2.5%, plus or minus.
In his view, the Indonesian economy was still far from overheating and had ample capacity to grow faster.
The position of Finance Minister, Purbaya continued, must be trusted to a figure ready to carry out the President’s vision, mission, and programs. In numerous public forums, President Prabowo Subianto had repeatedly reminded audiences that Indonesia was a great nation with enormous potential in both natural resources and human capital.
Properly managed, he said, there was no reason why the country could not realize Prabowo’s vision of Golden Indonesia 2045 — a prosperous, advanced, and sovereign nation.
The target of 8% economic growth was central to that vision. When President Prabowo first declared the goal at the beginning of his administration, many economists were skeptical, including those serving in government.
Purbaya was one of the very few who insisted the goal was achievable. He acknowledged that some viewed him as overconfident, but, as he explained, his conviction came from long experience as a researcher. He believed he had the tools and the strategies needed to push growth beyond 6% and gradually to 8%.
Purbaya distinguished himself as one of the few Indonesian economists not only with expertise but also with creativity. Facing global conditions that were shifting rapidly and often described as severe, Indonesia needed a Finance Minister who could think beyond convention.
As the official responsible for both revenue and expenditure, he argued, the post required someone who not only understood economic theory and had practical experience but also had the creativity to find fresh solutions.
When household purchasing power weakened, when banks faced liquidity shortages, when businesses complained of being strangled by tight money, Purbaya offered a simple but unconventional answer: add liquidity.
He also demanded that ministries, government agencies, and regional administrations spend their budgets on time rather than parking them in financial instruments. “No more buying securities,” he declared, adding that he would personally monitor the pace of government spending at every level.
Asta Cita
Purbaya positioned himself as a key player in realizing President Prabowo Subianto’s eight national development goals, known as Asta Cita. The third goal was to expand quality employment, foster entrepreneurship, strengthen creative industries, and continue infrastructure development.
The fifth focused on advancing downstream industries and industrialization to boost domestic value-added. The sixth emphasized building the economy from the villages upward to ensure fairer distribution and eradicate poverty.
To meet these objectives, President Prabowo had already launched eight flagship programs, including the Free Nutritious Meal initiative, the construction of three million homes, the establishment of 80,081 Merah Putih village and urban cooperatives, free health checkups, protection for migrant workers, and the creation of People’s Schools.
The government also pledged to continue downstream industrialization and expand food and energy sovereignty.
“All of these programs need liquidity,” Purbaya emphasized. He argued that Indonesia’s modest growth of around 5% in recent years was partly the result of insufficient liquidity in the system. Under Prabowo’s administration, the flow of funds would be directed more strongly toward rural areas and the lower middle classes, making growth not only faster but also more inclusive.
As one of the President’s trusted allies, Purbaya was given considerable room to maneuver in achieving these targets. He was tasked with fully optimizing all instruments under his control. The state budget (APBN), he noted, must serve as a vehicle to realize the government’s flagship programs, ensuring that public funds reached communities directly and fueled growth where it was most needed.
As “new blood” in the Red-and-White Cabinet, Purbaya was expected to help steer the economy from slowdown to expansion, from exclusive to inclusive growth, from stagnation to momentum, and from pessimism to optimism. Such a turnaround, he argued, required new strategies, a fresh policy mix, and above all a willingness to support private enterprise.
He stressed that the private sector would be given wider room to drive the economy, with the government’s role being to provide clear, fair regulations. “The private sector understands best the industries they operate in and how to grow them,” he said. With private businesses playing their role and the state ensuring a level playing field, Purbaya was confident that the 8% growth target could be achieved.
Authentic Style
Replacing Sri Mulyani — Indonesia’s first female Finance Minister and a long-serving figure with global stature — was never going to be easy. She had first held the post under President Susilo Bambang Yudhoyono from 2005 to 2010, then returned under President Joko Widodo from 2016 to 2024. In President Prabowo Subianto’s cabinet, she was reappointed in October 2024 but stepped down in September 2025.
Public criticism of Purbaya Yudhi Sadewa, who was sworn in on Sept. 8, 2025, initially flared. The contrast with his predecessor was striking. Sri Mulyani, who in her final year had become a frequent target of anger, was accused by some of being detached. Demonstrators even stormed her home in Tangerang.
Against that backdrop of public sensitivity toward fiscal authorities, Purbaya’s candid words resonated differently.
But within three days, the negative assessments began to fade as Indonesians saw something different in the new Finance Minister. He came across as a figure who spoke plainly, without theatrics or image-building. He was seen as someone who relied on data and analysis, consistent with his background as a researcher, rather than a politician seeking to charm.
From Sept. 10, 2025, negative perceptions declined further. Many in the public began to see sincerity in his tone, even if he still spoke more like an analyst than a cabinet minister.
Apology
During a press conference after his inauguration on Monday, Sept. 8, 2025, Purbaya commented on protests calling for the so-called “17+8” demands. He initially described the demonstrations as representing “only a small portion of the people.”
“… basically, here’s the thing. That is the voice of a small segment of our citizens. Perhaps some feel their lives are still lacking. Once I generate growth of 6%–7%, those demands will disappear automatically. People will be too busy finding jobs and enjoying better meals rather than protesting,” he said.
He also rejected the notion that Indonesia’s outlook was “gloomy,” calling it a mistaken view from those who did not understand the structure of the economy. “Fortunately, I do know,” he remarked.
At the same time, he argued that economic growth of 6%–7% during his tenure would reduce such discontent by creating new jobs and redirecting people’s focus to work and family life. But after facing criticism that he had sounded arrogant and unsympathetic, Purbaya clarified his remarks and issued a public apology.
“Yesterday, if I made a mistake, I ask forgiveness. What I meant is this: when the economy is under pressure, many people naturally feel hardship — not just a small portion, perhaps even a majority if they have taken to the streets,” he said at the handover ceremony with Sri Mulyani on Tuesday, Sept. 9, 2025.
“The key is how quickly we can revive the economy so that abundant jobs are created. That is what we will pursue in the future. So that was my point yesterday. If I misspoke, I apologize,” Purbaya added.
Appreciation and Embracing His Role
At his inaugural handover ceremony on Tuesday, Sept. 9, 2025, Purbaya took time to express deep appreciation for the achievements of the Finance Ministry under Sri Mulyani Indrawati. He declared that she would serve as his mentor going forward. With a touch of humor, he admitted that before being appointed minister, he often spoke bluntly “like a cowboy” — a style he now recognized was unsuited for the Finance Minister’s office.
“With humility, I ask for the support of the entire Finance Ministry staff to work together with me, ensuring that fiscal policy continues to serve as a strong instrument for maintaining stability, driving economic growth, and promoting prosperity for all Indonesians,” Purbaya said.
He went on to deliver a long tribute to his predecessor. “Allow me to extend my highest respect and deepest appreciation to Madam Sri Mulyani Indrawati,” he said. “Under her leadership, the Finance Ministry safeguarded Indonesia’s fiscal stability amid global turbulence, streamlined the budget, and oversaw government priority programs all the way through the 2026 state budget.
Furthermore, the institutional reforms she initiated, including the creation of new units, provide a critical foundation that will strengthen the Ministry in facing future challenges. The integrity, professionalism, and international reputation she brought have been an example to us all, while protecting Indonesia’s credibility in the eyes of the world.”
Driving Inclusive Growth
Purbaya underscored that all of President Prabowo Subianto’s flagship programs would require abundant liquidity. From free nutritious meals and three million new homes to the establishment of 80,081 Merah Putih cooperatives, protection for migrant workers, and free health checkups, each initiative depended on funds circulating smoothly through the economy. “Liquidity will determine how fast we can move,” he said.
The difference with previous administrations, he stressed, lay in where the liquidity would go. Under Prabowo’s leadership, the flow of funds would not be concentrated in the upper echelons of the economy but directed toward rural areas and lower- to middle-income communities. The aim was to ensure that Indonesia’s future growth would not only be stronger but also more inclusive.
As one of President Prabowo’s trusted ministers, Purbaya was given significant flexibility to translate vision into action. He was tasked with maximizing all instruments within his authority. The state budget (APBN), he emphasized, must be used as an engine to realize government programs, from economic sovereignty to poverty alleviation.
“Private businesses will be given broader space to drive growth, while the government must provide regulations that are fair and clear,” he said. “The private sector knows best the industries they operate in, their lines of business, and how to grow them. With private enterprise playing its role and the state ensuring a level playing field, I am confident we can achieve 8% growth.”
Taking over from a finance minister of Sri Mulyani’s stature was not easy, but Purbaya’s style of speaking plainly and admitting mistakes won him growing acceptance. By apologizing when needed, showing humility before staff, and expressing respect for his predecessor, he positioned himself as both authentic and accountable.
As he put it, the challenge ahead was to turn Indonesia from slowdown to expansion, from exclusive to inclusive growth, from low growth to high growth, and from pessimism to optimism. That task, he acknowledged, would require not only liquidity and fresh strategy but also strong collaboration across government and the private sector.
For Purbaya, the mission is clear: to optimize fiscal and monetary policy as twin engines of growth, ensure liquidity reaches the productive economy, and drive Indonesia toward 8% inclusive growth — a stepping stone to Prabowo Subianto’s vision of Golden Indonesia 2045.
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