Indonesia on a risky fiscal and democratic path under President Prabowo Subianto

Legislative opposition has been nearly neutered and proposals to end direct elections for provincial governors threaten democratic processes; civil society is intimidated with few outlets for dissent.

Investors are jittery as interest payments rise, credit-rating agencies eye possible downgrades, about $6 billion in foreign capital has fled, and the rupiah fell 11% to a record low.

The 3% budget deficit cap is an important signal of fiscal discipline; the article warns that lifting it could be risky.

The article notes that spending on projects such as free school meals and a network of 80,000 village cooperatives was already expensive, and the energy crunch has left little room for error.

President Prabowo dumped a respected finance minister and replaced her with Purbaya Yudhi Sadewa, who has called the IMF 'stupid' and who told The Economist in April that the president need not worry about developments in the global economy or the global oil price.

Correction (May 14, 2026): An earlier version of the article misspelled the name of Indonesia’s finance minister.

The article references riots that occurred in the previous year, indicating civil unrest during 2025.

Prabowo Subianto wins the top job in Indonesia, marking the end of his long political comeback since 1998.

The 1998 Asian financial crisis sparked mass protests that led to the toppling of Suharto, the father-in-law of Prabowo Subianto. The upheaval also cast Prabowo into political wilderness for about 25 years before he won the presidency in 2024.