Pacific Money | Economy | Southeast Asia

Indonesia’s President Nominates Central Bank Deputy as New Governor

The rupiah rose slightly on news of Destry Damayanti’s nomination, which will now pass to the House of Representatives for approval.

Buildings in the center of Jakarta, Indonesia.

Indonesia’s President Prabowo Subianto has nominated Destry Damayanti, a long-time central bank deputy, as the next governor of the institution, an official announced yesterday.

State Secretary Prasetyo Hadi confirmed that the nomination was submitted to the House of Representatives through a presidential letter, along with names of nominees for Bank of Indonesia (BI)’s senior deputy role, which Destry previously filled.

Destry Damayanti, a seasoned economist and former chief economist at the state lender Bank Mandiri, has served as the interim governor of BI since the unexpected resignation of Perry Warjiyo last month for “personal reasons.” Perry had served as BI’s governor of the central bank since 2018 and still had three years to run on his term.

Both appointments must be approved by lawmakers, but given the size of Prabowo’s majority in the House, this is likely to be little more than a formality. If (or when) she is approved, Destry, who has also worked for Citibank and served on the board of commissioners for the Indonesia Deposit Insurance Corporation, will become the first woman to take on the role on a permanent basis.

The announcement delivered a small fillip to the rupiah, which closed yesterday at 17,755 to the U.S. dollar, gaining 142 points, or 0.79 percent, from its previous close of 17,897.

The markets’ response hints at the fragile state of investor confidence in Indonesia. Since taking office in October 2024, Prabowo has pursued high-spending populist policies, including a multibillion-dollar free meal program, which have widened the fiscal deficit and pushed it toward its legally mandated ceiling of 3 percent of GDP. The former general has also increased the state’s involvement in the Indonesian economy in a bid to maximize the country’s return from natural resources and international trade.

These policies, along with the firing of respected Finance Minister Sri Mulyani Indrawati last September, have unsettled investors and undermined Indonesia’s hard-won reputation for fiscal conservatism.

In March, both Moody’s and Fitch announced ratings outlook downgrades for the country, with the latter citing the “increasing ⁠policy uncertainty and erosion........

© The Diplomat