Riandy Laksono – Purbaya Yudhi Sadewa, the plain-speaking senior economist who was recently appointed Indonesia's new finance minister, can't be more different to Sri Mulyani, his reformist predecessor who led the country's fiscal policymaking for more than a decade.
Unlike Mulyani, known for her cautious and calculated approach to pressing economic issues, Purbaya is much bolder, even blunt. For this, he has quickly earned a nickname: the 'cowboy' minister.
In his first days, Purbaya pointed out the sources of the economic misery that compelled people to take to the streets: slow money circulation and stubbornly low government spending. He humbly admitted that the economic pressure felt by the average Joe (or Jono) is not only driven by rising global economic uncertainty, but also the government's own policy choices, something Mulyani never fully acknowledged.
Facing these challenges, it is not hard to see why Minister Purbaya is determined to stimulate the economy with whatever tools he has at his disposal.
As a professional economist with a long career in the financial sector, his proposal to boost the economy unsurprisingly centres around injecting more money into the market. This will be achieved primarily through two initiatives: increasing liquidity in the banking sector to boost loan disbursements; and accelerating government spending. Both will expand the amount of money in the economic system.
Too little and too late?
While these plans look very good on paper, can they actually work? In the short run, they probably will.
After all, the year-on-year (YoY) growth of base money circulating in the system (often called 'M0') decreased to 0.02% in August and 0.34% in September 2025, after reaching its peak in March. During the commodity boom during the Susilo Bambang Yudhoyono (SBY) presidency (2004-2014), base money growth was sustained at 17% on average, but it slowed to around 7% during Jokowi's term as the effects of high commodity prices diminished.
With inflation remaining within the Bank of Indonesia's target range and actual growth still below its potential level, there is a window of opportunity to inject more money into the system without causing excessive inflationary risk.
Improving government spending disbursement may also deliver quick results. Instead of acting as a buffer during tough times, government spending in two consecutive quarters of 2025 has so far been a drag on economic growth, reducing it by 0.08 and 0.02 percentage points in Q1 and Q2 respectively. Prabowo's aggressive 'budget refocusing' at the start of 2025 now looks like austerity in practice.
But there is little that Minister Purbaya can do in the remaining three months of 2025. Certainly, he can take whatever is unspent by Prabowo's priority programs and disburse it to other, more 'old-school' programs, like infrastructure and routine travel spending, which would help revive the labor-intensive construction and hotel industry. However, while accelerating spending is crucial, it comes a little late.
And when scarce public money is allocated inefficiently, just for the sake of spending, there is a risk of panic spending.
Fixating on symptoms
The more serious problem with Minister Purbaya's approach is the absence of a coherent medium-to-long-term strategy for revitalising Indonesia's economic growth.
Rather than addressing root causes, his policy stance tends to conflate symptoms with underlying problems, leading to a focus on short-term remedies. For instance, he has repeatedly asserted that sluggish money circulation is now the fundamental problem in Indonesia's economy. In reality, however, slow money circulation is a symptom that points to deeper, structural weaknesses.
Money supply is like the temperature of the human body. It will not go up or down without good reason. When the human body gets warm, it is a signal that something is wrong in the immune system. So, knowing the level of temperature is essential, but a more careful examination is needed to conclude why the temperature is rising in the first place. Likewise, monitoring money supply offers valuable insights into the economy's direction, but it does not diagnose the root problems.
The reason why money grew so quickly during the SBY administration was that Indonesia benefited from high commodity prices at that time, fueled by increased demand from China after its accession to the WTO. Additionally, the Fed's quantitative easing following the US subprime mortgage crisis of 2008 and 2009 injected a large amount of liquidity into the US market, which spilled over into developing economies, including Indonesia.
When these windfalls ended during Jokowi's term, money circulation naturally began to slow. But Minister Purbaya has so far been largely silent about why money circulation has slowed down recently.
Since the commodity boom ended, Indonesia has struggled to return to a high-growth trajectory. Without identifying and building a new engine of growth, further injections of liquidity will have little effect. Using an analogy, an economic engine requires lubricants – liquidity – to function smoothly, but if the engine itself is broken or outdated, no amount or quality of lubricant will get the economy moving again.
Therefore, when the economy is stalled due to a failing engine, the priority should be to repair or replace that engine, not to keep adding more lubricants. For newly injected liquidity to have a meaningful impact, the government must therefore ensure that the economy's underlying growth engine is robust and capable of sustaining activity.
No quick fixes
In fact, Indonesia's low spending disbursement is a reflection of a much more fundamental problem.
Currently, Prabowo's flagship programs, especially the Free and Nutritious Meal program (MBG), are seen as a silver bullet to deliver the 8% growth and millions of jobs. At one point, the national economic council even released an economic simulation to justify this vision, albeit using questionable methodology.
The current approach to the MBG program sets up unrealistic expectations, even as it continues to grapple with the complex challenge of consistently providing hygienic and nutritious meals to students. When an oversized budget is allocated in pursuit of rapid economic growth without fully recognising the operational challenges of implementation, the result is an inevitable gap between planned and actual spending.
Around Rp 300 trillion of old spending allocations inherited from Jokowi's era have been cut to help finance Prabowo's new priorities – including MBG and Danantara, the massive new sovereign wealth fund. Unfortunately, as of today, less than 10% of the MBG budget has been disbursed.
So, unless the philosophy around MBG is changed from the top, the public will continue to see unrealistic expectations and excessive budget outlay on MBG, and, in all likelihood, continued problems with delivery. No press conferences can make the low spending MBG disbursement issue go away for Minister Purbaya.
Looking ahead, Indonesia must focus on what has caused its growth to stagnate at around 5% for the last decade, rather than fiddling with quick fixes at the other end of the spectrum. Only by addressing the underlying challenges and moving beyond surface-level solutions can Indonesia realise its full economic potential.
This is a task that will require vision, commitment, and leadership extending well beyond the remit of any single minister, including the 'cowboy' minister himself.