JAKARTA (Reuters) – Indonesia’s finance minister denied rumours of her imminent resignation and pledged to maintain fiscal discipline at a hurriedly called press conference announced after the country’s benchmark index plunged to a multi-year low on Tuesday.
Indonesian stocks fell as much as 7.1% on Tuesday and the rupiah slid to a two-week low against the dollar, pressured by concerns over the government’s fiscal strategy and growth prospects a day before a central bank review of monetary policy.
The drop, which also follows rumours of resignation of Sri Mulyani Indrawati in the market, also led to a 30-minute trading halt on breaching the 5% mark.
“We are here, we are responsible,” she told a press conference. “I will not step down.” Sri Mulyani said adding state budget deficit will be maintained at 2.53% of GDP in 2025, below the 3% legal ceiling.
Jakarta has responded to the stock’s plunge by saying that the economy is fundamentally still strong, with Sri Mulyani specifically saying the latest assessment of gross tax revenues in the first half of March have turned into positive.
She also wiped out concerns of capital outflow by sharing huge incoming bids in the government’s regular bonds auction on Tuesday, which raised 28 trillion rupiah ($1.71 billion).
Tax revenues, excluding customs and excises, fell an annual 30.2% in the first two months of 2025 to 187.8 trillion rupiah due to moderating commodity prices, huge tax restitution and administrative changes, the ministry has said.
The stock plunge on Tuesday was also driven by investor concerns over the share movement of Indonesia’s state-owned companies, Sri Mulyani said, adding the government will ensure transparency in the management of those firms, currently under the supervision of newly set up sovereign wealth fund Danantara Indonesia.
Shares of the three top state lenders Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia closed down on Tuesday by 3.21%, 3.92% and 3.23%, respectively.
The Jakarta SE Composite index finished the day down 3.8%, its sharpest fall in nearly three years.
The rupiah, which hit a two-week low of 16,470 per dollar on Tuesday, has slipped about 2% on the dollar this year – the largest fall of any Asian currency.
Bank Indonesia is expected to hold its policy rate at 5.75% on Wednesday amid the depreciation in the rupiah, though a minority of banks predicts a 25-basis-point cut, a Reuters poll has shown.
($1 = 16,420.0000 rupiah)
(Reporting by Stefanno Sulaiman and Stanley Widianto; Editing by John Mair, Martin Petty)
