Indonesia’s President dismisses finance and security ministers following deadly protests

President Prabowo Subianto reshuffled his Cabinet on Monday, removing several key ministers after nationwide protests over rising living costs and controversial perks for lawmakers turned violent.

The public unrest, which resulted in multiple deaths, was sparked by revelations that all 580 members of the Indonesian parliament were receiving a housing allowance of 50 million rupiah ($3,075) per month — nearly ten times Jakarta's minimum wage — on top of their salaries. The protests reflect growing dissatisfaction with Subianto's leadership and the government's failure to address economic challenges.

Among those dismissed were Finance Minister Sri Mulyani Indrawati, a respected technocrat with a background at the IMF and World Bank, and Budi Gunawan, the minister responsible for political and security affairs.

Indrawati will be replaced by Purbaya Yudhi Sadewa, an economist and head of the Deposit Insurance Corporation. While Sadewa has experience in government and economic policy, critics argue he lacks direct experience managing state finances.

Protests turn deadly

The five-day demonstrations saw violent clashes between protestors and police, with the National Commission on Human Rights reporting 10 deaths, and police confirming 7. One of the most high-profile deaths was that of 21-year-old delivery driver Affan Kurniawan, who was killed when a police armored vehicle drove through a crowd, causing him to fall.

The unrest escalated further after Indrawati's home, along with several lawmakers' residences, was looted on August 31.

Analysts say these events reflect a deep-rooted frustration with economic issues — including widespread layoffs, declining purchasing power, and perceptions that the government has prioritized political elites over ordinary citizens.

In response to the public outcry, Subianto revoked lawmakers' perks, including the housing allowance and international travel privileges, in an attempt to calm tensions.

Additional ministers removed

Alongside Indrawati and Gunawan, Subianto also dismissed the ministers for cooperatives, youth and sports, and migrant worker protection.

Economic and market reaction

Financial markets reacted negatively to the removal of Indrawati. The Jakarta Stock Exchange fell 1.28%, and the rupiah weakened, with one-month non-deliverable forwards dropping 1.1%, reaching their lowest level since May.

Indrawati was widely credited with maintaining fiscal stability and was seen as a key figure in keeping investor confidence high. Her departure raised concerns about Indonesia's economic direction.

Fadhil Hasan, senior economist at the Institute for Development of Economics and Finance, acknowledged Sadewa's abilities but questioned his suitability for the finance role due to his lack of experience managing national finances.

Sadewa's response

At a press conference, Sadewa defended his appointment, highlighting his past roles advising previous administrations and his work in government. He emphasized his market-friendly approach and pledged to consult with Indrawati to ensure a smooth transition.

His priorities, he said, would include driving economic growth through efficient spending without a complete overhaul of the current fiscal system.

Economic outlook

Subianto campaigned on a promise to raise Indonesia's economic growth rate to 8% within five years. While this target remains ambitious, official data showed growth at 4.87% in Q1 2025 and 5.12% in Q2.

Sadewa acknowledged the challenge, saying, "If I claimed we could hit 8% right now, I'd be lying. But we're moving toward that goal as quickly as we can."