INTERNATIONAL – President Prabowo Subianto carried out a sweeping cabinet reshuffle on September 8. Al-Jazeera said, President Prabowo dismissing five ministers in response to escalating unrest across Indonesia. The move came after violent demonstrations erupted over lawmakers’ lavish perks, including housing allowances nearly ten times Jakarta’s minimum wage.
Among those dismissed were Finance Minister Sri Mulyani Indrawati, Coordinating Minister for Politics and Security Budi Gunawan, as well as the ministers responsible for cooperatives, youth and sports, and migrant worker protection. In addition, Prabowo announced the formation of a new Ministry of Hajj and Umrah.
Sri Mulyani, a highly respected technocrat with a background at the IMF and World Bank, was abruptly replaced—reportedly just an hour after chairing a meeting—by Purbaya Yudhi Sadewa, former chief of Indonesia’s Deposit Insurance Corporation. Sadewa vowed to support Prabowo’s ambitious 8 percent growth target, promising to “map out fiscal measures” and ensure efficient spending while ruling out new taxes.
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The sudden removal of Sri Mulyani, long seen as a symbol of fiscal discipline, sent shockwaves through financial markets. The Jakarta Composite Index dropped about 1.3%, while the rupiah slid nearly 1% against the U.S. dollar, reflecting investor anxiety. Analysts warned that her departure could undermine Indonesia’s hard-won fiscal credibility. Under her leadership, the government deficit was kept near 3% of GDP, helping maintain the country’s investment-grade status.
With Purbaya expected to align more closely with Prabowo’s expansionary agenda, concerns have grown that costly populist programs—such as nationwide free school meals—could strain the budget and compromise long-term stability.
The reshuffle also targeted ministries at the center of public dissatisfaction, signaling Prabowo’s intent to reassert control and legitimacy. Yet unrest remains volatile: protests have already left at least ten people dead and thousands detained.
Observers view the overhaul as a defining moment for Prabowo’s presidency, one that could reshape both Indonesia’s political landscape and its economic direction in the months ahead.
