Economic Observer: The Market Will Be Positive For The Minister Of Finance, Although Initially Wait And See

The Minister of Finance of the Republic of Indonesia, Purbaya Yudhi Sadive. (Photo: Doc. Antara)

JAKARTA - Economic observer from the Indonesia Strategic and Economics Action Institution Ronny P Sasmita believes that even though Purbaya Yudhi Sadives' profile is not as strong as Sri Mulyani Indrawati in the eyes of the market, her appointment as Minister of Finance will still be positively welcomed by financial market players.

"First, I think Purbaya, even though it is not as strong as SMI profile in the market, will still be greeted positively by the market. Because he is not new in the world of finance, both banking and non-banking," he said in his statement, Monday, September 8.

Ronny also considered that Purbaya's appointment reflected President Prabowo Subianto's careful consideration, because apart from being considered capable of supporting relatively aggressive fiscal policies, it was also considered capable of promoting the macroprudential security of the national economy.

"Because it has a banking background in LPS and has also been in non-banking financial institutions such as Danareksa," he added.

He added that although there was a change from Sri Mulyani to Purbaya, the direction of macrophysical policy was not expected to change significantly.

According to him, Purbaya will continue Sri Mulyani's main policy in supporting government priority programs, but remain within safe fiscal limits.

"This means that Purbaya will continue to keep the deficit below 3 percent, although it is likely to reach 3 percent by the end of the year, because of the need for financing spending on Prabowo's flagship programs," he explained.

Ronny estimates that the market will be wait and see, but will not overreact to this change. The reason is, Purbaya is considered quite predictable in terms of policy and is not too much different from Sri Mulyani in the fiscal approach.

"Even with the background in LPS, Purbaya may be much more conservative than SMI from a fiscal perspective, because it prioritizes macroprudential stability," he said.

Furthermore, Ronny considered that Prabowo's decision to appoint Purbaya showed the President's caution in choosing the Minister of Finance who was able to maintain fiscal credibility and national economic stability.

"This step to appoint Purbaya shows that Prabowo is also very careful about who the Minister of Finance is. It doesn't suddenly raise any of the Deputy Ministers of Finance to become Minister of Finance," he concluded.