Indonesia’s incoming president, Prabowo Subianto, plans to reappoint Finance Minister Sri Mulyani Indrawati to his new cabinet, making her the first person to hold the ministry under three different presidents.
The 62-year-old was one of several dozen ministerial candidates who met with Prabowo at his private residence in South Jakarta yesterday evening, as he confirms his ministerial picks ahead of his inauguration on October 20.
After the meeting, Sri Mulyani confirmed the appointment to reporters. “He asked me to serve as the finance minister again,” Sri Mulyani said, according to a report by the Jakarta Globe.
She said that during a “long and extensive discussion” with Prabowo, the president-elect laid out some of his priorities about the economy, in particular his desire to strengthen state finances in anticipation of a host of ambitious spending programs.
“We have had several discussions about the state budget, as my team drafted the 2025 budget during this transition period. It was important for me to understand the priorities of the president-elect and vice president-elect,” Sri Mulyani said. “We regularly consulted with each other to discuss strategies for strengthening the Finance Ministry and the state finances to support his programs.”
The announcement confirms reports that have been swirling this week that Prabowo was preparing to retain Sri Mulyani, who has served as the executive director of the International Monetary Fund and managing director of the World Bank. She is also one of Indonesia’s longest-serving finance ministers, having held the post for long stretches under both President Susilo Bambang Yudhoyono and outgoing President Joko Widodo.
During this time, Sri Mulyani has earned considerable respect in international circles, particularly for her reforms of the chaotic Indonesian taxation system and her role in steering Indonesia through the global financial crisis and the COVID-19 pandemic.
Much speculation surrounds the identity of Prabowo’s cabinet, which is set to be announced before he takes the oath of office on October 20, including with several ministers of the administration of outgoing President Joko “Jokowi” Widodo. According to a report by Reuters, these included several ministers from Jokowi’s cabinet, including Interior Minister Tito Karnavian, Trade Minister Zulkifli Hasan, and Energy Minister Bahlil Lahadalia.
Prabowo embarks on an ambitious spending program, which includes an increase in defense spending, hikes in civil servants’ salaries, and a $28 billion program to give 83 million children and pregnant women free meals, to say nothing of the likely expenses involved in finishing Indonesia’s new capital Nusantara. The former general has also announced an ambitious goal of increasing annual economic growth to 8 percent by the end of his five-year term.
In order to achieve this target, Prabowo announced plans to increase the country’s debt-to-GDP ratio to 50 percent, up from 39 percent currently. Some reports have also suggested that he might also be exploring ways to remove the fiscal deficit and debt-to-GDP ratio ceilings imposed in the wake of the Asian financial crisis of 1997-98.
These plans have unsurprisingly thrown a scare into financial markets. Major rating agencies, including Fitch Ratings and Moody’s, have raised concerns that Prabowo’s spending plans will mark a break with Indonesia’s historically conservative approach to fiscal policy, noting that At the same time, his plans to increase state revenues “may take considerable time.”
In this context, having a trusted figure like Sri Mulyani in the Finance Ministry will help stabilize and improve the country’s finances, while calming outside analysts and perhaps also warning the government off its more risky ambitions. In comments to Reuters, Jahen Rezki, an economist with the University of Indonesia, expressed hopes that “Mulyani’s presence could serve as a brake if the new government comes up with unfeasible or unrealistic policies.”