Indonesia finance chief takes his growth bet to a world on edge

JAKARTA - Mr Purbaya Yudhi Sadewa’s bluntness often jars. Some market watchers were taken aback in February when the Indonesian finance minister suggested a Citibank analyst with two master’s degrees was not a true economist because he lacked a PhD.

Last week, he called the World Bank’s 4.7 per cent growth projection for 2026 a “major mistake”.

As Mr Purbaya moves around Washington on his first overseas trip as finance chief, he does so against a backdrop of investors already frazzled by recently lowered credit outlooks from two ratings agencies, a warning from MSCI and mounting budget pressures driven by both President Prabowo Subianto’s spending and the blocked Strait of Hormuz.

Does he feel international onlookers are being unfairly critical?

“Maybe they don’t know me yet,” Mr Purbaya said in an interview with Bloomberg News.

But “I’m trained by the US, so my knowledge comes from the US. They cannot point a finger at me and tell everybody I don’t know anything about fiscal policy”.

For Mr Purbaya, now more than seven months into the job, the task of soothing overseas investors is as much personal as it is economic.

He must persuade people that his confidence – and his willingness to challenge conventional caution – can deliver results without eroding the considerable policy credibility built by his predecessors. 

That includes convincing stakeholders he can capably replace predecessor Sri Mulyani Indrawati, a globally known former World Bank managing director who served three presidents until she departed in the wake of deadly protests over political elites’ perks and inequality in 2025.

Mr Purbaya, 61, cuts a youthful figure with tousled hair and a jocular demeanor, often flashing a look of amusement before furrowing his eyebrows in concentration.

Speaking on a recent weekday morning near Jakarta’s financial district, he jokes he has the time to talk because the President is travelling overseas.

He said he is still puzzled by the decisions of the ratings agencies, coming as they did after Indonesia posted some of the fastest economic growth among Group of 20 economies.

“To me, it’s a bit strange,” he said. “We’re moving forward to become, eventually, a developed nation. So don’t hesitate to invest.”

As Indonesia’s first new finance chief in nearly a decade, prudence is one of Mr Purbaya’s core messages: Indonesia does not have any plans to breach a long-respected cap on its budget deficit, and is not seeking to ramp up borrowing. 

At a time of higher oil prices, Mr Purbaya is trimming budgets, boosting liquidity to support lending, ensuring government spending stays on schedule and overseeing a “de-bottlenecking” team aimed at improving the business climate in a US$1.4 trillion (S$1.78 trillion) economy seeking to attract more foreign investment. He is increasingly focused on “leaks” – money lost to tax evasion and under-invoicing. 

There are early signs of improvement, albeit helped by a recent block of holidays and one-off fiscal stimulus.

Fourth-quarter growth was the strongest in years, and Mr Purbaya is certain the latest quarter will be even higher. The anger that led to the street protests in August 2025 has quieted.

“The biggest, most important ingredient to stability is growth,” he said. That will allow policymakers to focus on long-term development, he added.

Still, that confidence faces real-world challenges. The closures in the Strait of Hormuz are raising the cost of the enormous price Indonesia pays to keep fuel prices low for a population of more than 280 million people.

Consumer confidence recently fell to a five-month trough, the rupiah is at a record nadir and many economists are forecasting higher inflation.

While Mr Purbaya thinks Indonesia will post its best growth in more than a decade in 2026 at around 6 per cent, the World Bank thinks it likely will not even match 2025’s pace. 

Many analysts do not share Mr Purbaya’s optimism.

Ongoing oil disruptions will complicate “efforts to keep the budget deficit under control”, adding to pressures from fertiliser concerns and El Nino, the periodic warming of Pacific Ocean waters that disrupts global weather patterns, said PT Samuel Sekuritas Indonesia managing director Harry Su.

According to DBS Group Holdings economist Radhika Rao, Mr Purbaya can “protect fiscal credibility or push harder for growth – managing both will inevitably become a challenge”.

While efforts to carve out budget savings and rationalise spending to accommodate higher subsidies are “prudent”, any prolonged energy market shocks will widen the fiscal Bill, she said.

As it happens, Mr Purbaya’s path to the finance ministry began in oil and gas. 

In his fifth year as a field engineer at Schlumberger, now known as SLB, in the mid-1990s, Mr Purbaya was growing restless when a major international economic conference descended upon his hometown of Bogor, a satellite city of Jakarta.

It ultimately produced the Bogor Goals – APEC’s landmark commitment to free and open trade and investment – and Mr Purbaya’s interest was piqued. His future wife wanted him to get a PhD. His father encouraged him to do something with economics.

He chose Purdue University partly because his undergraduate rector had studied there.

In Indiana, he watched from afar as the Asian financial crisis took hold and sent the rupiah into a tailspin, leading to the near collapse of Indonesia’s banking system and ouster of Suharto, the strongman who led Indonesia for three decades.

His PhD thesis, on the effect of exchange rates on foreign direct investment, was published as a new era of democracy was taking root in South-east Asia’s biggest economy.

Once home, Mr Purbaya took on a number of economist roles close to the government, including leading a state-owned brokerage and advising cabinet ministers in multiple administrations.

By the time Mr Prabowo came to office in October 2024, Mr Purbaya was chairman of Indonesia’s deposit insurance agency, a body akin to the FDIC that was established after the 1990s crisis.

Domestically, Mr Purbaya has cultivated an image rarely associated with finance ministers: Candid, informal and approachable.

He keeps ministry meetings loose, discourages overly polished presentations and promotes open discussion, ministry staff say.

Outside the office, he’s known for eating at roadside stalls, buying simple batik shirts at traditional markets and engaging with the public on social media, including via TikTok livestreams and in explanatory videos that have garnered millions of views.

“I talk freely; I’m not like a minister,” he said of his working style. “I don’t change my appearance and the way I talk.”

The way he talks has earned him the nickname of “cowboy”, which some see as a reflection of his unconventional style and unfiltered nature.

He attributes the moniker to quarterly meetings of the Financial System Stability Committee, a grouping that brings together the country’s four primary financial authorities to discuss matters such as crisis preparation.

The meetings tended to be “very polite”, Mr Purbaya said, whereas his modus operandi is to fire off direct questions to generate a more lively debate.

“That’s why they call me cowboy,” he said. “Shooting here and there.”

That directness was instrumental in getting him the top finance job in the first place. 

Mr Purbaya recounts how he took to a podium in downtown Jakarta in April 2025 with little inkling he was making the case to become Indonesia’s next finance minister.

In a 14-minute address to an audience that included Mr Prabowo, he laid out the rationale for bullishness about the world’s fourth-most populous country. Having sat through an afternoon of mainly tame speeches, Mr Prabowo took note.

When a few months later Indonesia was rocked by street violence over rising living costs, the president called Mr Purbaya to his private residence to discuss the road ahead.

“Can you do it?” Mr Purbaya recalled him asking. “I can.” Then came a second question – whether he had the guts. Mr Purbaya said he did.

Mr Purbaya has since found it easy to work with the president, he said, describing them as aligned “most of the time” and adding that “he never dictates to me what to do”.

In a recent round of budget tightening, for example, the president agreed on “the need to adjust” planned spending for his flagship free meals programme, a costly venture that has drawn regular concern from international investors.

The two also share views on larger problems facing Indonesia, including the belief that an elite class is not adequately sharing its wealth with the country that made their fortunes possible.

Rich Indonesians and companies are not currently paying their fair share of taxes, with major commodity exporters under-invoicing and lapses within the tax authority enabling the practice, Mr Purbaya said.

For much of this century, they’ve been “kind of immune to the law”, he said.

Mr Prabowo and Mr Purbaya also believe Indonesia, an economy long held back by corruption and red tape, can grow much faster.

Mr Purbaya said at a forum in 2025 that he initially laughed at Mr Prabowo’s idea of 8 per cent, but later began to see starkly higher growth as a distinct necessity.

That optimism is partly what drew in Mr Prabowo.

“I thought, this guy knows what he’s talking about,” the president told Bloomberg in a recent interview. “I need people who are optimistic.”

A key part of Mr Purbaya’s strategy is convincing investors that Indonesia’s track record of fiscal prudence gives it room to take more risk.

For example, he has redirected more than half of a US$25 billion rainy-day fund to state banks to promote lending and help anchor government bond yields. His predecessor largely used the funds as a buffer to support budget financing and manage fiscal risks.

One positive aspect to Mr Purbaya’s appointment, said economist Wijayanto Samirin, who is also a lecturer at Paramadina University, is that he has no connections to the finance ministry in the past, something that is helping him in clean-up and reform efforts.

On the other hand, it is not always helpful to “overpromise, oversimplify, and be overconfident. It may cost him his credibility”.

“What worries me”, he added, is that the minister could take those traits to meetings with sophisticated foreign investors in Washington this week. “It can backfire.” 

A government readout of Mr Purbaya’s US trip showed his audience included HSBC Global Asset Management, Lazard Asset Management, BlackRock and TD Asset Management.

Mr Purbaya shrugs off such concerns, saying he would give himself a 10 out of 10 so far, before reconsidering and settling on “maybe an eight”.

“You give me the scorecard,” he said with a laugh. “I think I’m good enough.” BLOOMBERG