Purbaya Yudhi Sadewa, the newly appointed Finance Minister, has set an ambitious target of achieving 8 percent economic growth, a bold statement that contrasts sharply with his predecessor Sri Mulyani Indrawati’s more cautious approach. 

This target, announced just one day after Purbaya's appointment, has generated both optimism and skepticism among economists and international investors, as the country faces persistent challenges including low labor productivity, a narrow tax base, and global uncertainties.

Purbaya, who holds a PhD in Economics from Purdue University, Indiana, and an undergraduate degree in Electrical Engineering from the Bandung Institute of Technology (ITB), takes a more quantitative and risk-taking approach to fiscal policy.

His vision for economic expansion marks a departure from Sri Mulyani’s legacy of fiscal discipline, which had earned Indonesia credibility in global markets. Sri Mulyani's strategy prioritized stability, balancing expansionary measures during the pandemic with a return to fiscal caution once the crisis subsided.

Syafruddin Karimi, an economist at Andalas University, said that while Purbaya’s ambition to drive growth may provide a psychological boost to the private sector and the public, the 8-percent target may be politically motivated rather than economically feasible.

“Indonesia’s fundamental challenges, such as low labor productivity and external economic pressures, pose significant barriers to achieving such high growth,” Karimi said on Monday, September 8, 2025.

The shift in fiscal philosophy presents risks as investors who trusted Sri Mulyani’s emphasis on stability may now reassess their confidence in Indonesia’s economic outlook.

“Should Purbaya’s aggressive growth targets fail to align with fiscal discipline, the risks of currency depreciation, higher bond yields, and capital outflows could materialize,” Karimi cited.

Ultimately, the transition in leadership represents a critical crossroads for Indonesia’s economy, pitting caution against ambition. While Sri Mulyani's stewardship ensured economic stability, Purbaya’s vision presents a new, risk-laden path toward higher growth.

“The future will depend on whether Purbaya can balance his ambitious goals with the fiscal responsibility needed to sustain long-term stability,” Karimi said.

Conviction to challenge policies

Muhammad Andri Perdana, a researcher at CELIOS (Center of Economic and Law Studies), argues that the country does not need a Finance Minister more intelligent than Sri Mulyani Indrawati. What Indonesia truly needs, according to Perdana, is a Finance Minister with the conviction to challenge policies when necessary, even if they come from President Prabowo Subianto himself.

Perdana emphasizes that Sri Mulyani’s successor must have the courage to speak up when it comes to evaluating programs, especially those directly aligned with the President’s agenda.

“The new Finance Minister must be someone who is not afraid to question the fiscal implications of presidential initiatives, even if these programs are favored by the President,” he said. “It’s about standing firm in discussions with the President when presidential instructions could have long-term detrimental effects on the nation’s fiscal health.”

Sri Mulyani’s tenure was marked by her careful and balanced approach to fiscal management, emphasizing stability and discipline. Perdana warns that if the new Finance Minister simply becomes a “yes man,” agreeing with the President’s policies without critical evaluation, Indonesia’s economic situation could worsen. “If the new Finance Minister is only a figure who does not question the President’s policies, the situation will only deteriorate,” he added.

Perdana also highlighted the importance of having a Finance Minister who is not afraid to address critical issues, such as budget allocations and financing structures.

“We need a minister who can stand their ground, advocate for policies that prioritize the country’s fiscal sustainability, and not succumb to political pressure,” he said.

As Indonesia faces difficult fiscal challenges ahead, Perdana believes that the new Finance Minister’s ability to maintain integrity and independence will be essential for securing long-term economic stability and prosperity.

Ties with Luhut Pandjaitan

Purbaya is known for his close ties with Luhut Binsar Pandjaitan, former Coordinating Minister for Maritime Affairs and Investment and the current Chief of the National Economic Council (DEN).

However, Karimi emphasizes that Purbaya is more than just a "close ally" of the former powerful minister. According to Karimi, Purbaya is an economist of integrity and intellect, a highly educated technocrat who stands apart due to his strong academic background and extensive experience in both the private sector and government.

“Purbaya’s profile is not defined by political connections, but by his deep knowledge, analytical capacity, and moral integrity,” he said. “His ability to navigate complex economic challenges sets him apart as a technocrat capable of making independent decisions, even in a politically charged environment.”

While the perception of political networks influencing policy decisions will persist, Karimi believes Purbaya will demonstrate his independence by relying on his intellectual and analytical skills.

"This is what will distinguish him from merely being an extension of political power. His integrity and technical expertise are what make him uniquely qualified to balance political demands with the technocratic needs of fiscal management," he said.

For the capital markets, this message of independence is crucial. Investors are not just concerned with personal connections but with the consistency of policies, fiscal credibility, and the direction of government communication. If Purbaya can successfully balance political ties with professional integrity, the capital markets are likely to respond positively.

“What the market seeks most is not who occupies the ministerial chair, but whether the policies pursued will offer certainty, consistency, and a sustainable growth trajectory,” Karimi concluded.