By: Eko B. Supriyanto, Editor-in-Chief of InfoBank
Purbaya Yudhi Sadewa is not Sri Mulyani Indrawati, the world-class former Minister of Finance. Purbaya is an engineer from the Bandung Institute of Technology (ITB). Unlike Sri Mulyani, he did not study at the Faculty of Economics at the University of Indonesia (UI), which regularly produces ministers of finance. However, at one time, the position was held by Bambang Sudibyo and Boediono, who studied at UGM. Rizal Ramli, also from ITB, has also held the position.
So, it is not surprising that many people are skeptical. In fact, the UI Student Executive Board (BEM UI) held a demonstration the day after his inauguration to demand his immediate removal because of his unsympathetic and dismissive comments about the civil society movement. Purbaya apologized, saying he had no intention of being disrespectful.
Social media was filled with criticism, especially regarding Purbaya’s personality. He is known for being outspoken and seemingly having nothing to lose. The author knew Purbaya well from 2000 to 2003, when Purbaya was an economist at the Danareksa Institute. As a resource person, Purbaya is strong in research and has a different perspective on figures than other economists.
Furthermore, Purbaya has worked in the industry for nearly 20 years. He was an advisor to Susilo Bambang Yudhoyono (SBY) at the Presidential Staff Office (KSP) and the Coordinating Ministry for Maritime Affairs and Investment. Most recently, he was Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS). Purbaya is considered competent in terms of experience and education, having progressed from being an “advisor” to an “executor.”
About two months ago, before Purbaya Y. Sadewa was appointed Minister of Finance, I met him at the LPS office. In his neat office, which was decorated with his collection of keris (traditional daggers), including one from Purbaya himself, he spoke to me as a friend would, just as he had 20 years ago. The content was exactly as he had explained it to me in the House of Representatives. He discussed the stagnant economic growth of around five percent, the declining tax ratio, and government-dominated development, which was different during the SBY era when the private sector was given a role.
He also discussed interest rates, which he said were still relatively high despite having been lowered four times. Foreign exchange reserves continue to grow. However, unlike in several other ASEAN countries, such as Malaysia, the exchange rate is weakening. Liquidity is tight.
Purbaya, appearing for the first time as Minister of Finance before Commission XI of the Indonesian House of Representatives, surprisingly spoke about government funds in Bank Indonesia (BI) accounts. The goal was to flood the market with liquidity. This policy differs greatly from previous ones, which were always cautious about providing funds stored at BI. But Purbaya is different. He wants to flood the market with liquidity.
According to him, Rp200 trillion of the Rp425 trillion in government funds held by BI will be injected into the market. This money will be placed in Himbara banks. It is hoped that these banks will then channel credit to businesses.
Constitutionally, BI is the state’s sole treasury holder. In return for this function, BI provides the government with remuneration, which is significant at 87.5 percent of the BI Rate. This symbiotic mechanism has been arranged to create balance. However, the government issues debt securities with higher yields than those offered by BI. While the previous Minister of Finance’s steps were not incorrect, they were not appropriate for the priority of economic growth.
Purbaya moved government accounts from BI to commercial banks under the pretext of “stimulating credit growth,” driven by the availability of funds and relatively lower interest rates. Many bankers have complained about the “oranges eating oranges” phenomenon, in which banks collect funds from the public and then place them in government securities (SBN) and Bank Indonesia Retail Certificates. In the market, meanwhile, banks compete with SBN.
Banking authorities with valid data explain that banking liquidity is very loose. The data speaks for itself: the ratio of liquid assets to third-party funds (AL/DPK) is 27.5%, far exceeding the minimum requirement of 10%.
This means that liquidity in the national banking sector as a whole is abundant. However, the loan-to-deposit ratio of large banks (state-owned enterprises) is already at 90-93%. Clearly, this is tight, and bankers find it difficult and expensive to obtain liquidity (at two hundred basis points) from the counter rate.
An interesting question arises, though. Do not misdiagnose the problem. Some do not consider slow credit growth, at around 7 percent, to be caused by a lack of aggregate liquidity. The root of the problem lies in weak credit demand and the existence of more attractive alternatives for banks to invest their funds.
In June 2025, the amount of undisbursed loans—those that have been approved but not yet disbursed—increased by 9.5 percent. This indicates that businesses are hesitating to expand due to high economic uncertainty and risk. Conversely, banks have safe and profitable investment options, such as government bonds (SUN), SBN, and SRBI, the latter of which was recently launched by BI.
Why lend to the high-risk real sector when funds can be placed in government instruments with guaranteed returns? However, Purbaya’s confidence is noteworthy. The former Chairman of the LPS Board of Commissioners understands this liquidity issue very well. In fact, LPS guarantee interest rates have not changed and tend to be lower, allowing interest rates to fall.
Purbaya’s approach of flooding the market with liquidity while balancing the roles of the private sector and the government offers new hope. New hope! The government must also address the real sector and business certainty. Policies that flood the market with misdirected liquidity must be avoided. For example, funds from the government in Himbara banks are not channeled into credit but rather “returned” to the government and BI at higher interest rates.
This happened because businesses were afraid to operate due to the high level of uncertainty and the psychological impact of the riots. Additionally, monetary and fiscal policy schools of thought should collaborate. They should not work independently with their own goals. Indonesia currently needs market liquidity with low interest rates, and the government will immediately spend its budget.
Hopefully, this new “school of thought” on flooding the market with liquidity will address the shortage of liquidity in relatively small banks, encourage lending, and ultimately lead to better economic growth by providing space for the private sector and the government to grow together.
Do not repeat the old way of borrowing money at high interest rates indiscriminately. This is especially true after borrowing money stored in the BI vault under the pretext of being a fiscal “cushion.” Don’t be tempted to borrow again just to entertain the president, as you did for ten years. Now, you’re storing a “time bomb” in the 2025–2027 fiscal year.
Mr. Finance Minister, do not raise taxes again. Closing the leaks from the underground economy, which have reached Rp6,000 trillion over the past ten years, is a better option than cutting regional funds too drastically, as this will cripple regional economies.
Good luck in your duties, Mr. Finance Minister Purbaya!
New Hope! The new Minister of Finance is Purbaya Yudhi Sadewa.
By: Eko B. Supriyanto
Editor-in-Chief of InfoBank
Purbaya Yudhi Sadewa is not Sri Mulyani Indrawati, the world-class former Minister of Finance. Purbaya is an engineer from the Bandung Institute of Technology (ITB). Unlike Sri Mulyani, he did not study at the Faculty of Economics at the University of Indonesia (UI), which regularly produces ministers of finance. However, at one time, the position was held by Bambang Sudibyo and Boediono, who studied at UGM. Rizal Ramli, also from ITB, has also held the position.
So, it is not surprising that many people are skeptical. In fact, the UI Student Executive Board (BEM UI) held a demonstration the day after his inauguration to demand his immediate removal because of his unsympathetic and dismissive comments about the civil society movement. Purbaya apologized, saying he had no intention of being disrespectful.
Social media was filled with criticism, especially regarding Purbaya’s personality. He is known for being outspoken and seemingly having nothing to lose. The author knew Purbaya well from 2000 to 2003, when Purbaya was an economist at the Danareksa Institute. As a resource person, Purbaya is strong in research and has a different perspective on figures than other economists.
Furthermore, Purbaya has worked in the industry for nearly 20 years. He was an advisor to Susilo Bambang Yudhoyono (SBY) at the Presidential Staff Office (KSP) and the Coordinating Ministry for Maritime Affairs and Investment. Most recently, he was Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS). Purbaya is considered competent in terms of experience and education, having progressed from being an “advisor” to an “executor.”
About two months ago, before Purbaya Y. Sadewa was appointed Minister of Finance, I met him at the LPS office. In his neat office, which was decorated with his collection of keris (traditional daggers), including one from Purbaya himself, he spoke to me as a friend would, just as he had 20 years ago. The content was exactly as he had explained it to me in the House of Representatives. He discussed the stagnant economic growth of around five percent, the declining tax ratio, and government-dominated development, which was different during the SBY era when the private sector was given a role.
He also discussed interest rates, which he said were still relatively high despite having been lowered four times. Foreign exchange reserves continue to grow. However, unlike in several other ASEAN countries, such as Malaysia, the exchange rate is weakening. Liquidity is tight.
Purbaya, appearing for the first time as Minister of Finance before Commission XI of the Indonesian House of Representatives, surprisingly spoke about government funds in Bank Indonesia (BI) accounts. The goal was to flood the market with liquidity. This policy differs greatly from previous ones, which were always cautious about providing funds stored at BI. But Purbaya is different. He wants to flood the market with liquidity.
According to him, Rp200 trillion of the Rp425 trillion in government funds held by BI will be injected into the market. This money will be placed in Himbara banks. It is hoped that these banks will then channel credit to businesses.
Constitutionally, BI is the state’s sole treasury holder. In return for this function, BI provides the government with remuneration, which is significant at 87.5 percent of the BI Rate. This symbiotic mechanism has been arranged to create balance. However, the government issues debt securities with higher yields than those offered by BI. While the previous Minister of Finance’s steps were not incorrect, they were not appropriate for the priority of economic growth.
Purbaya moved government accounts from BI to commercial banks under the pretext of “stimulating credit growth,” driven by the availability of funds and relatively lower interest rates. Many bankers have complained about the “oranges eating oranges” phenomenon, in which banks collect funds from the public and then place them in government securities (SBN) and Bank Indonesia Retail Certificates. In the market, meanwhile, banks compete with SBN.
Banking authorities with valid data explain that banking liquidity is very loose. The data speaks for itself: the ratio of liquid assets to third-party funds (AL/DPK) is 27.5%, far exceeding the minimum requirement of 10%.
This means that liquidity in the national banking sector as a whole is abundant. However, the loan-to-deposit ratio of large banks (state-owned enterprises) is already at 90-93%. Clearly, this is tight, and bankers find it difficult and expensive to obtain liquidity (at two hundred basis points) from the counter rate.
An interesting question arises, though. Do not misdiagnose the problem. Some do not consider slow credit growth, at around 7 percent, to be caused by a lack of aggregate liquidity. The root of the problem lies in weak credit demand and the existence of more attractive alternatives for banks to invest their funds.
In June 2025, the amount of undisbursed loans—those that have been approved but not yet disbursed—increased by 9.5 percent. This indicates that businesses are hesitating to expand due to high economic uncertainty and risk. Conversely, banks have safe and profitable investment options, such as government bonds (SUN), SBN, and SRBI, the latter of which was recently launched by BI.
Why lend to the high-risk real sector when funds can be placed in government instruments with guaranteed returns? However, Purbaya’s confidence is noteworthy. The former Chairman of the LPS Board of Commissioners understands this liquidity issue very well. In fact, LPS guarantee interest rates have not changed and tend to be lower, allowing interest rates to fall.
Purbaya’s approach of flooding the market with liquidity while balancing the roles of the private sector and the government offers new hope. New hope! The government must also address the real sector and business certainty. Policies that flood the market with misdirected liquidity must be avoided. For example, funds from the government in Himbara banks are not channeled into credit but rather “returned” to the government and BI at higher interest rates.
This happened because businesses were afraid to operate due to the high level of uncertainty and the psychological impact of the riots. Additionally, monetary and fiscal policy schools of thought should collaborate. They should not work independently with their own goals. Indonesia currently needs market liquidity with low interest rates, and the government will immediately spend its budget.
Hopefully, this new “school of thought” on flooding the market with liquidity will address the shortage of liquidity in relatively small banks, encourage lending, and ultimately lead to better economic growth by providing space for the private sector and the government to grow together.
Do not repeat the old way of borrowing money at high interest rates indiscriminately. This is especially true after borrowing money stored in the BI vault under the pretext of being a fiscal “cushion.” Don’t be tempted to borrow again just to entertain the president, as you did for ten years. Now, you’re storing a “time bomb” in the 2025–2027 fiscal year.
Mr. Finance Minister, do not raise taxes again. Closing the leaks from the underground economy, which have reached Rp6,000 trillion over the past ten years, is a better option than cutting regional funds too drastically, as this will cripple regional economies.
Good luck in your duties, Mr. Finance Minister Purbaya!
