Indonesia's newly appointed Finance Minister Suahasil Nazara takes the oath of office at the presidential palace in Jakarta on 14 September 2026 (Fatih Mubarok/Getty)

Indonesia's new finance minister faces a test of delivery

Suahasil Nazara’s job is to make sure Indonesia does not have to choose between development and fiscal credibility.

Hilman Palaon

2 October 20264 min read

Indonesian President Prabowo Subianto wants faster growth and a broader social agenda while Indonesia must preserve the fiscal credibility (Opens in new window) that has underpinned its economic stability. As Indonesia’s new finance minister (Opens in new window), Suahasil Nazara must help deliver Prabowo’s agenda without allowing the government’s ambitions to outrun its capacity to implement it.

Suahasil’s advantage is his understanding of how policy design translates into delivery. His test is whether he can use the Finance Ministry’s levers to make Prabowo’s programs work.

Suahasil has described his appointment as a continuation of the economic agenda (Opens in new window). “In my view, this is not a change, but simply a continuation,” he said after taking office. “I have been part of the Finance Ministry all this time, so we will continue working.” For a technocrat, that continuity carries an expectation that he can strengthen the Finance Ministry’s performance, reinforce confidence in Indonesia’s economic management and turn policy ambitions into effective delivery.

That expectation is consistent with how Suahasil views fiscal policy (Opens in new window). “Fiscal policy is always an anchor for a country, an anchor for stability,” he said. For him, the state budget must allocate resources, cushion the economy against shocks and redistribute resources across regions. The challenge is to use the budget to support economic growth and stability (Opens in new window), household welfare and human capital while maintaining confidence in public finances.

Suahasil’s background (Opens in new window) makes this emphasis on effective spending particularly relevant. An economist by training, he became a professor at the University of Indonesia and headed its Demographic Institute. He later worked at the National Team for the Acceleration of Poverty Reduction (TNP2K) under the Vice-President’s Office and served on the National Economic Committee. At the Finance Ministry, he headed the Fiscal Policy Agency – the ministry's policy think tank – before becoming vice finance minister and now finance minister.

I came to know Pak Sua through our work at TNP2K. What struck me was his approach to policy reform. He was prudent and rigorous about evidence, but equally focused on implementation: who should benefit, how support would reach those who need it, how it should be monitored, what impact it would have on households and the local economy, and what would happen when the system got it wrong.

He did not see economic growth, poverty reduction and human capital as separate agendas – the priority was to make them reinforce one another.

That approach will now be tested by Prabowo’s priority programs. Their objectives are sound in principle but the problem has been the execution. Suahasil’s advantage is his understanding of how policy design translates into delivery. His test is whether he can use the Finance Ministry’s levers – funding, targeting, incentives, monitoring and fiscal discipline – to make Prabowo’s programs work.

The free nutritious meals (MBG) (Opens in new window)program is perhaps the clearest example, designed to improve child development while supporting local economies through food supply chains. Yet it has faced repeated food-poisoning incidents (Opens in new window)alongside the arrest of the former head of the National Nutrition Agency and senior officials in a corruption investigation (Opens in new window).

Suahasil is not responsible for MBG’s delivery but the Finance Ministry controls the program’s budget and maintains oversight of how it is used. The question is whether Suahasil can use those levers to ensure MBG delivers its intended benefits.

The approved 2027 budget cuts energy subsidy spending by 6%, pointing to further reductions ahead.

The same challenge applies to other social safety net programs. Suahasil has described the national budget (Opens in new window) as “one of the main instruments for maintaining consumption, providing social protection and assistance while reducing the burden on households.” He takes a pragmatic view of energy subsidies (Opens in new window), a perennial source of controversy in Indonesia, as they are widely considered to be inefficient but also politically difficult to change. Suahasil has argued that support for fuel, cooking gas and electricity subsidies can help stabilise energy prices, protect household purchasing power and give businesses greater certainty over energy costs. In his view, ensuring subsidies reach those who need them most requires reliable data, effective communication and mechanisms to identify and correct errors in beneficiary lists. The approved 2027 budget cuts energysubsidy (Opens in new window) spending by 6%, pointing to further reductions ahead.

Indonesia is trying to move away from broad subsidies to better targeted social support. The National Single Social and Economic Data (DTSEN (Opens in new window)) program consolidates household and individual data to improve program delivery. It covers around 95.3 million households, or 289.3 million individuals. The government aims to complete data cleaning and link the data to beneficiaries’ bank accounts by the end of 2026, with trials of direct digital cash transfers expected in early 2027. The digital social protection system (Opens in new window) is intended to reach about 50 million low-income citizens.

But better data alone will not solve the problem. Households in need can still be missed, while others continue to receive benefits despite being better able to cope without them. The World Bank has stressed that fuel-subsidy reform requires more than good policy design (Opens in new window): it depends on careful sequencing, gradual price adjustments, targeted cash transfers, clear public communication, effective use of DTSEN and transparency over how savings are reinvested.

These examples point to what may be Suahasil’s clearest contribution as finance minister. Indonesia does not have to choose between fiscal credibility and development. But it does have to make scarce public resources work harder. In the end, what matters is whether public money delivers the outcomes government promises.

About the author

Hilman Palaon

Dr Hilman Palaon is a Research Fellow at the Lowy Institute’s Indo-Pacific Development Centre. His work focuses on digital economy issues in the Indo-Pacific region, including financial inclusion, economic empowerment, and technology innovation.

Topics

Indonesia Southeast Asia Economy