Jakarta. New Finance Minister Suahasil Nazara faces an early test of whether he can strengthen confidence in Indonesia's fiscal management as investors weigh rising financing requirements, shifting budget assumptions and uncertainty over the country's economic outlook.

Suahasil inherits the Finance Ministry after a turbulent period under his predecessor, Purbaya Yudhi Sadewa, whose outspoken style and public disagreements with other officials frequently put fiscal policy in the spotlight.

Purbaya cultivated an unusually public profile for a finance minister and frequently defended the government's fiscal position even as economic conditions diverged from some of the assumptions underpinning the state budget.

The 2026 budget assumed an Indonesian Crude Price of $70 a barrel. Energy Minister Bahlil Lahadalia said this week that the average price from January through September had instead reached around $85–$90.

The rupiah has also traded considerably weaker than the Rp 16,500 per US dollar assumption in the 2026 state budget.

Financial markets have experienced significant volatility, while foreign investment flows have remained under scrutiny amid concerns about Indonesia's fiscal direction and policy predictability.

For economists, the challenge facing Suahasil is therefore not simply keeping the deficit within statutory limits but convincing investors and businesses that fiscal policy remains transparent, predictable and responsive to changing economic conditions.

“The Finance Ministry manages trust, not just state budget figures,” said Josua Pardede, chief economist at Permata Bank.

Josua called on Suahasil to provide a comprehensive and candid fiscal outlook for 2026 and 2027, including projections for revenue and spending as well as scenarios covering changes in economic growth, the exchange rate, oil prices and interest rates.

“The government does not need to guarantee that its figures will never change. It needs to explain under what conditions policies would change and how it would respond,” he said.

Indonesia's 2027 draft budget projects Rp 3.43 quadrillion in state revenue and Rp 4.10 quadrillion in expenditure, leaving a Rp 671.2 trillion deficit equivalent to 2.40% of GDP.

The government has pledged to maintain the deficit below the statutory ceiling of 3% of GDP.

“Restoring credibility does not mean excessive spending cuts,” Josua said. “What is needed is better spending quality, stronger revenue mobilization and more effective financing management.”

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Businesses Also Need Policy Certainty
Concerns over fiscal credibility extend beyond financial markets, according to Eko Listiyanto, deputy director of the Institute for Development of Economics and Finance (INDEF).

He pointed to delays in tax refunds as one issue that had weakened confidence among businesses accustomed to receiving repayments after overpaying their tax obligations.

“This has become an indication that fiscal credibility is being eroded,” Eko said.

He called on the government to accelerate verified tax refunds and ensure that budget allocations for national priority programs are aligned with their readiness for implementation.

Predictability, he argued, matters because abrupt changes in fiscal administration can affect corporate cash flow and investment decisions even when headline budget indicators remain within statutory limits.

Coordination and Policy Continuity
Suahasil's appointment also comes during a period of change in Indonesia's economic policymaking institutions.

Purbaya was dismissed less than two months after Perry Warjiyo stepped down as governor of Bank Indonesia.

Suahasil must now coordinate with newly appointed Bank Indonesia Governor Destry Damayanti and other financial authorities through the Financial System Stability Committee (KSSK).

“Coordination is not about how often institutions meet. It is about policy continuity,” Eko said, adding that fiscal coordination should continue to respect the central bank's independence.

Clear coordination is particularly important when fiscal and monetary authorities face different but interconnected challenges. The government is seeking stronger economic growth, while Bank Indonesia is responsible for maintaining monetary stability, including inflation and the rupiah.

During his tenure, Purbaya repeatedly rejected suggestions that fiscal management was responsible for weakness in the currency, arguing that management of the rupiah fell within Bank Indonesia's mandate.

Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE), said existing coordination mechanisms should be used to reconcile policy assessments before potentially conflicting messages reach the public.

“The KSSK should be a forum for aligning diagnoses and policy responses before announcements are made, not just for explaining differences after conflicting statements have already appeared in public,” Yusuf said.

Bond Market Tests Confidence
Government bonds provide another measure of how investors assess Indonesia's fiscal outlook.

Although foreign inflows into government bonds have returned for four consecutive months, economists say the broader recovery in investor confidence remains fragile.

Yusuf said investors buying government securities were not merely purchasing bonds but also placing confidence in the stability of Indonesia's fiscal framework through political pressures and economic shocks.

“If that anchor weakens, risk premiums and government borrowing costs increase, and corporations ultimately face higher capital costs as well,” Yusuf said.

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