A changing of the finance guard
On September 8, 2025, there was a change in the line-up of the Indonesian cabinet involving an important post, that of the Finance Secretary. Sri Mulyani Indrawati, the former Finance Secretary, who was in that job for more than 10 years, was replaced by Purbaya Yudhi Sadewa, who had been in the Indonesian Deposit Insurance Board for more than five years, eventually leading the institution. The changing of the finance guard surprised the markets, which reacted negatively. The Indonesian Stock Market index dropped towards the end of trading hours while the rupiah weakened.
However, while new in his Finance Ministry position, Purbaya Yudhi Sadewa is a seasoned economist. He has an electrical engineering degree from Bandung Institute of Technology, the "Indonesian MIT". His first job was as a field engineer for the oil company Schlumberger Overseas SA, from 1989 to 1994. He continued his studies and received a masters and Ph.D. degree in economics from Purdue University in the US. He then started his economic career with Danareksa, one of the oldest securities companies in Indonesia, and from there, held various positions in the government before becoming the head of the Indonesian Deposit Insurance Board in 2020.
In other economic news, the Central Bank published its quarterly report on the external accounts, which showed a larger deficit in the current account for Q2 2025. While in Q1 2025, Indonesia's current account reported a deficit of $288 million or 0.07% of GDP, in Q2 2025, the current account reported a deficit of $3,014 million or 0.84% of GDP. At the same time, the financial and capital account in the balance of payments in Q2 2025 recorded a large deficit of $5,166 million. The deficit in the current account combined with large deficit in the financial account led the overall balance of payments to register a large deficit, of approximately $6,743 million. The deficit in the balance of payments led foreign exchange reserves to decline to $152,567 million as of June 2025.
The Central Board of Statistics released the balance of trade data for July 2025. Exports increased by 5.6% M/M to reach $24,748.9 million in July, with non-oil exports up by 6.5% to $23,811.6 million. At the same time, imports increased by 6.43% to $20,575.4 million, resulting in a trade surplus of $4,173.5 million, another large surplus.
The Central Board of Statistics also released the inflation report. August 2025 registered M/M deflation of 0.08%. With that performance, Y/Y inflation stood at 2.31%, a level significantly lower than the previous month and in the lower part of the target inflation corridor. Based on that background, Bank Indonesia decided to reduce the benchmark rate 25 bp to 5% at its August monetary policy meeting.
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