Jakarta. Newly appointed Finance Minister Suahasil Nazara pledged on Monday to strengthen the credibility of the Finance Ministry and use the state budget to promote economic growth and deliver greater benefits to Indonesians, just hours after being sworn into office.

Suahasil replaced Purbaya Yudhi Sadewa, whose roughly yearlong tenure was marked by an assertive approach to fiscal policy as well as a series of public controversies.

Purbaya occasionally lashed out at critics, at one point telling them to “go back to school” and on another occasion dismissing some of his detractors as “TikTok economists.”

He also faced protests from regional leaders over cuts to central government transfers and recently differed publicly with Jakarta Governor Pramono Anung over plans to issue Jakarta Bonds.

Another disagreement emerged over state-owned enterprise dividends when Purbaya publicly said he would ask sovereign wealth fund Danantara Indonesia to contribute Rp 120 trillion ($6.8 billion) in dividends to the state budget. Danantara CEO Rosan Roeslani later said he was unaware of such a request.

Against that backdrop, Suahasil's emphasis on credibility and stability offered an early indication of the tone he intends to set at the Finance Ministry.

He received a warm welcome from ministry employees when he arrived at the office after being sworn in by President Prabowo Subianto at the State Palace.

“We will ensure that the state budget promotes growth, stabilizes our economy and provides the greatest possible benefit to the Indonesian people as a whole,” Suahasil said in his address.

“We will continue our respective work and build a Finance Ministry that is credible, trustworthy and a source of pride for all Indonesians.”

More than Stability
Public policy expert Achmad Nur Hidayat, however, said Suahasil should be expected to deliver more than bureaucratic stability.

Suahasil is not an outside technocrat brought in to overhaul an existing system, Achmad said, but a longtime Finance Ministry policymaker who helped manage that system himself.

The public therefore has the right to expect him to reassess policies he previously helped administer rather than simply maintain continuity, Achmad said.

One issue he highlighted was what he described as an overly rigid approach to keeping Indonesia's fiscal deficit below the statutory ceiling of 3% of gross domestic product.

“The government may maintain a deficit of 2.9%, but if it does so by suppressing transfers to regional governments, indiscriminately cutting subsidies or increasing the burden on the middle class, the problems will remain,” Achmad said.

“The quality of fiscal policy cannot be judged solely by the deficit figure.”

Achmad said credit rating agencies such as Fitch and Moody's also look beyond the size of Indonesia's fiscal deficit, with policy consistency, governance, predictability and weak government revenue among the broader considerations affecting assessments of the country's finances.

He argued that Indonesia should not have to choose between aggressive fiscal policy that lacks certainty and conservative fiscal policy that fails to generate growth.

Instead, he called for a more productive fiscal policy in which government spending is assessed according to the economic benefits it generates.

“Ultimately, Suahasil must choose his own legacy,” Achmad said. “His long experience at the Finance Ministry is both an asset and a burden. He knows the problems from the inside. Therefore, he has no excuse to simply maintain the status quo.”

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