JAKARTA - Economic observer from Andalas University Syafruddin Karimi assessed that the change of Minister of Finance from Sri Mulyani Indrawati to Purbaya Yudhi Sadive was an important moment that marked the change in the direction of Indonesia's fiscal policy.
"President Prabowo Subianto chose Purbaya, an economist who graduated from Purdue University, to replace Sri Mulyani, who has been known as a symbol of fiscal discipline and credibility in the eyes of the global market," he said in his statement, quoted on Tuesday, September 9.
He said that after his inauguration, Purbaya immediately issued an ambitious statement where Indonesia's economic growth of 8 percent was not impossible.
According to him, the statement was greeted with a mixture of optimism and doubt by economic actors.
He explained that Sri Mulyani graduated from the University of Illinois Urbana-Champaign, who during her tenure was known as a technology with integrity with a precautionary approach and consistently emphasized the importance of fiscal discipline, transparency, and consistency in managing state finances.
"During his tenure, the international market saw Indonesia as a developing country that was able to maintain macro stability despite being hit by various global crises. In the context of the COVID-19 pandemic, he dared to take expansionary steps to save the economy, but immediately returned the fiscal path to discipline when the crisis began to subside," he explained.
According to him, this credibility is not only an important asset for the National but also a political capital in the eyes of the world which is now in line with his departure from office.
Meanwhile, he said that Purbaya came with a different approach, with his background as an electrical engineer who graduated from ITB and economist from Purdue forming a more quantitative, analytical character, and tended to take risks.
"His long experience in the private sector and government agencies gave him a pragmatic perspective to connect economic models with policy practices. When he stated that eight percent growth is not impossible, he wanted to show that with the courage of expansion, synergy between the government and the private sector, as well as the right policy design, Indonesia could surpass its historical limitations," he explained.
He conveyed that the statement was in contrast to Sri Mulyani's more realistic and conservative style in setting economic targets.
Philosophically, he explained that Sri Mulyani views stability as the main prerequisite for achieving growth. On the other hand, Purbaya seems to believe that high growth can be achieved first through a strong push for expansion from the state.
"This shift in philosophy has major implications. The international market, which previously believed in the anchor of Sri Mulyani's stability, must now reassess Indonesia's consistency. If Purbaya focuses too much on figure ambitions without paying attention to fiscal credibility, the risk of weakening the rupiah, increasing bond yields, and the release of capital flows will be even more real," he said.
According to Karimi, if Purbaya manages to convince the market that high growth is accompanied by structural reforms, spending efficiency, and a healthy investment climate, then this skepticism can turn into new optimism.
However, Karimi said that the 8 percent growth target was not an easy thing to achieve, because Indonesia was still facing structural challenges such as low labor productivity, medium income traps, inadequate logistics infrastructure, narrow tax bases, and external pressure from global trade dynamics and developed country protectionism policies.
"The target of eight percent is more like a political statement than economic calculations," he explained.
However, according to Karimi, Purbaya's optimism still has its own value and this gives a signal that the government does not want to stagnate in the five percent economic growth that has lasted for the last two decades.
"The courage to offer an ambitious vision can be a psychological boost for the private sector, bureaucracy, and the wider community. The question is not only whether eight percent can be achieved, but whether Purbaya is able to unite optimism with the fiscal discipline inherited by Sri Mulyani," he said.
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"If he succeeds, Indonesia can open a new chapter of sustainable development. If it fails, high ambitions will actually risk triggering economic instability," he added.
He said that this change was not just a change in position in the cabinet, but a fight between two policy approaches, namely prudence versus expansion, credibility versus ambition.
"Sri Mulyani passed on world- respected stability, while Purbaya brought new optimism that dared to challenge the boundaries," he explained.
Karimi said that the future of the Indonesian economy will be greatly determined by Purbaya's ability to prove that high growth can be achieved without sacrificing the macroeconomic foundation that has long been built.
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