Unexpected cabinet reshuffle. On 8 September, President Prabowo unexpectedly announced a major cabinet reshuffle, only 323 days after his inauguration and following widespread violent protests. A total of five ministers were removed, including the long-serving Finance Minister Sri Mulyani and Minister of Cooperatives Budi Arie. During President Jokowi s first term, the first major cabinet reshuffle came after 296 days of his inauguration, replacing seven ministers.
Expanded cabinet. Of the five ministers removed, two were professionals and three were politicians, including PKB and Golkar. In addition, three ministers removed began their terms under President Jokowi s presidency, including Sri Mulyani, Budi Arie Setiadi and Minister of Youth and Sports Dito Ariotedjo. Meanwhile, the incoming composition comprises one professional and four politicians. With the newly established Ministry of Hajj and Umrah, the size of the cabinet expanded by two, bringing the total to 49 ministers and 57 vice ministers. About 58% of cabinet members are professionals versus 42% politicians, compared to 59% and 41% previously.
Political rebalancing. The number of ministers from Gerindra increased to a total of eight from six. The additions are Ferry Yuliantono as Cooperative Minister and Mochamad Yusuf as Hajj and Umrah Minister. Another key adjustment was the removal of Budi Gunawan as Coordinating Minister for Political and Security Affairs; he once served as an aide to former President Megawati (PDIP). The post will be filled ad interim by presidential appointment. The president has not yet announced the replacement of Vice Minister of Labour Immanuel Ebenezer and Minister of Youth and Sports Dito Ariotedjo.
Sri Mulyani s departure. Purbaya Yudhi Sadewa was appointed as Finance Minister, replacing Sri Mulyani. Sri Mulyani first joined Jokowi s administration in July 2016 (she also served as minister under the SBY administration between 2004 2010). Rumors of Sri Mulyani s departure from Prabowo s cabinet had surfaced several times, including after the recent violent protests that involved looting at her house and debates over fiscal efficiency in April. Purbaya previously chaired the Board of Commissioners of the Indonesia Deposit Insurance Corporation (LPS) since 2020, held senior posts at the Coordinating Ministry for Maritime Affairs and Investment, and was Chief Economist of Danareksa Research Institute, an SOE. Like Sri Mulyani, he holds a PhD in economics.
Market reactions. Market sell-offs were seen after the announcement, reflecting a shock. However, the major reshuffle was not entirely unexpected and is not unusual. Speculation about a reshuffle had been around for a while, creating uncertainty, so this could be seen as one overhang removed. We also do not think this reflects growing political instability or a split in the ruling coalition. The resignation of Sri Mulyani was also not entirely surprising, given recurring rumors. President Prabowo will likely make a follow-up announcement, as there are still several vacancies in his cabinet.
Fiscal policy implications. While Sri Mulyani was widely seen as more conservative in terms of fiscal policy, prioritizing fiscal discipline, Purbaya, based on his past media comments, is seen as more pragmatic. In an interview after his inauguration, Purbaya said the 8% economic growth target is challenging and can only be reached in the next 2 3 years, but in the near term the plan is to boost growth to 6%. He also emphasized he will not overhaul the current fiscal framework. However, we do not expect Sri Mulyani s departure to result in looser fiscal discipline. Indeed, in his annual speech on 15 August, President Prabowo reiterated his commitment to maintaining a low fiscal deficit.
