Indonesia’s leader sacks finance, security chiefs in aftermath of fatal protests as President Prabowo Subianto carried out a sweeping Cabinet reshuffle on Monday, responding to nationwide unrest triggered by rising living costs and controversial perks granted to lawmakers.
The shake-up came after days of violent demonstrations across the country, reflecting growing public frustration with the government and parliament’s perceived indifference to economic hardship. Protesters took to the streets to oppose generous benefits for legislators at a time when many Indonesians are grappling with layoffs and declining purchasing power.
In total, five senior ministers were dismissed. Among the most high-profile exits were Finance Minister Sri Mulyani Indrawati and Coordinating Minister for Political, Legal and Security Affairs Budi Gunawan. Indrawati, one of Indonesia’s longest-serving finance ministers, is internationally respected for her previous roles as an executive director at the International Monetary Fund and a managing director at the World Bank.
Prabowo appointed economist Purbaya Yudhi Sadewa, the chairman of Indonesia’s Deposit Insurance Corporation, as Indrawati’s successor. Sadewa inherits the post at a delicate moment for Southeast Asia’s largest economy, as markets react nervously to political instability and leadership changes.
The protests erupted after reports revealed that all 580 members of Indonesia’s House of Representatives were receiving a monthly housing allowance of 50 million rupiah (about $3,075), on top of their salaries. Introduced last year, the allowance was nearly ten times Jakarta’s minimum wage, fueling public outrage.
According to the National Commission on Human Rights, at least 10 people were killed during five days of unrest. The commission criticized security forces for what it described as an inhumane response to demonstrators. Police, however, placed the death toll at seven.
Public anger intensified after the death of 21-year-old ride-hailing driver Affan Kurniawan. He was reportedly delivering food when an armored police vehicle drove into a crowd of protesters, causing him to fall and later die from his injuries.
Indrawati herself became a focal point of protesters’ anger over soaring prices and lawmakers’ privileges. On August 31, her home was reportedly looted, along with the residences of several legislators.
Political analysts say the demonstrations marked the boiling point of long-simmering public discontent over economic pressures that have not been adequately addressed, including widespread job losses and shrinking household incomes.
Tensions eased somewhat after Prabowo moved last week to revoke lawmakers’ perks, including the housing allowance, and suspend overseas travel for officials. He also removed the ministers overseeing cooperatives, youth and sports, and migrant worker protection.
Financial markets reacted sharply to the Cabinet reshuffle. Indonesia’s benchmark stock index fell 1.28% on Monday to close at 7,766.85, while the rupiah weakened, with one-month non-deliverable forwards sliding 1.1% to 16,583 per dollar — their lowest level since May.
Despite the market jitters, Indonesia remains an attractive destination for investors, said Fadhil Hasan, a senior economist at the Institute for Development of Economics and Finance. He noted that Indrawati’s credibility had long reassured both domestic and international markets through disciplined fiscal management.
However, Hasan added that in recent years Indrawati had accommodated ambitious government programs that increased public debt and diluted the strength of her fiscal stance. While he described Sadewa as a capable economist, Hasan questioned whether he has sufficient experience managing state finances at this scale.
Speaking at a late-night news conference, Sadewa defended his appointment, pointing to his advisory roles in the past two administrations and several senior government positions, including deputy for maritime sovereignty coordination. He said he would engage closely with Indrawati to seek fiscal guidance and maintain stability.
Calling himself “a market person,” Sadewa sought to reassure investors that Indonesia’s fiscal health would remain a priority. His immediate focus, he said, is to accelerate economic growth by refining fiscal measures and improving the efficiency of government spending, rather than overhauling existing systems.
During his presidential campaign, Prabowo pledged to lift economic growth to 8% within five years. Official data, however, shows Indonesia’s economy expanded 4.87% in the first quarter of 2025 and 5.12% in the second.
“If I said the economy can grow 8%, I’d be lying,” Sadewa said candidly. “But we are moving in that direction as fast as possible.”
