Transition in Indonesian Governance: Thomas Djiwandono's Key Finance Role

Indonesia's outgoing President Joko Widodo will appoint Thomas Djiwandono, an adviser to president-elect Prabowo Subianto, as deputy finance minister to ensure a smooth transition of power. Djiwandono will maintain his role after Prabowo's term begins in October. Markets reacted cautiously, with the rupiah falling against the U.S. dollar.

Indonesia's outgoing President Joko Widodo is set to appoint Thomas Djiwandono, the fiscal adviser to president-elect Prabowo Subianto, as a deputy finance minister later today, according to senior politician Sufmi Dasco Ahmad. Dasco, a leading member of Prabowo's Gerindra party, confirmed Reuters' earlier report of Djiwandono's planned appointment, adding that he will continue in the role into Prabowo's administration starting in October.

Neither Djiwandono, the presidential palace, nor the finance ministry have commented on the appointment. The move is seen as a strategy to facilitate a smooth governmental transition from President Widodo, commonly known as Jokowi, to Prabowo, Dasco told Reuters.

In market reactions, the rupiah fell approximately 0.4% against the U.S. dollar in early Thursday trading, marking the most significant drop among emerging Asian currencies. Djiwandono will collaborate with Widodo's current finance minister, Sri Mulyani Indrawati, renowned for her judicious fiscal management, particularly during the COVID-19 pandemic.

Financial markets are closely monitoring Prabowo's fiscal policy proposals and his finance minister selections, as ratings agencies have warned that his expensive campaign promises might elevate financial risks. Concerns about rising debt under Prabowo's administration have previously contributed to pressure on the rupiah and Indonesian bond prices.

Thomas Djiwandono, educated in the U.S., is the principal spokesperson for Prabowo's fiscal policies, frequently highlighting the incoming president's vow to comply with fiscal regulations and maintain the 2025 budget deficit below the 3% GDP threshold. His professional background includes positions at a Hong Kong securities firm and the Indonesian conglomerate Arsari Group, led by Prabowo's brother Hashim Djojohadikusumo, as per the Gerindra party website. He serves as the party's chief treasurer.

Maybank Indonesia economist Myrdal Gunarto expressed hope that Djiwandono's appointment would enhance communication on fiscal synergy and implement campaign proposals prudently within fiscal constraints. Although the market reaction appeared neutral with fiscal numbers unchanged, Gunarto attributed the rupiah's drop to external factors.

(With inputs from agencies.)