Former Bank Indonesia Governor Burhanuddin Abdullah recently shared insights from a strategic meeting with President Prabowo Subianto at the Presidential Palace in Jakarta on Friday (May 22). The discussion centered on navigating economic volatility, with Burhanuddin drawing parallels between today’s economic landscape and the challenges Indonesia faced in 2005, particularly regarding inflationary pressures.
Burhanuddin clarified that the meeting was not specifically focused on the depreciation of the rupiah. Instead, it served as a collaborative session to analyze broader economic conditions and leverage historical lessons to manage current pressures. “It was a discussion, reflecting on past events that serve as relevant lessons for today’s situation,” Burhanuddin told reporters.
The high-level meeting included key economic figures, such as Finance Minister Purbaya Yudhi Sadewa, Coordinating Minister for Economic Affairs Airlangga Hartarto, and Minister of Investment and Downstreaming Rosan Perkasa Roeslani. Former Deputy Minister of National Development Planning Lukita Dinarsyah Tuwo and economist Paskah Suzetta were also in attendance.
Reflecting on 2005, Burhanuddin highlighted the 126 percent fuel price hike that significantly impacted national inflation and stability. While the current global pressures differ from the domestic-driven spikes of the past, he noted that the resulting economic impacts are similar, suggesting that policy responses should be refined accordingly. “The impact is similar to what we see today; perhaps the handling needs to be refined,” he explained.
Addressing questions regarding the current exchange rate, which fluctuates around Rp 17,700 per US dollar, Burhanuddin emphasized that there was no specific discussion on currency intervention. Instead, the focus remained on the synergy between fiscal and monetary policies. He added that President Prabowo is committed to ensuring that government policy steps are clearly communicated to the public and market participants.
During the meeting, Burhanuddin provided several proposals to the President. While he kept the specifics private, he noted that President Prabowo explicitly tasked Finance Minister Purbaya Yudhi Sadewa with reviewing his suggestions. Burhanuddin also recalled the 2005 era, when Bank Indonesia raised interest rates from 8 percent to 12.5 percent to curb post-fuel-hike inflation. He expressed that the current central bank benchmark rate of 5.25 percent remains an appropriate measure for maintaining economic and currency stability.
Regarding the current value of the rupiah, Burhanuddin maintained that the depreciation is relatively minor compared to historical crises. “The current depreciation is about 5 percent. Compared to the 42 percent seen during the past crisis, this is quite small,” he remarked, urging for better public education to manage psychological perceptions of the exchange rate.
Finance Minister Purbaya Yudhi Sadewa confirmed that he has been instructed to study the input provided by Burhanuddin and other economic experts. He emphasized that Indonesia’s economic fundamentals remain robust, though he acknowledged that the government faces challenges from market perceptions. “The fundamentals are sound. We are now focusing on improving how we communicate our successes to the public,” Purbaya stated.
Coordinating Minister for Economic Affairs Airlangga Hartarto added that the meeting was instrumental in planning for future economic scenarios. “The President has requested that we, alongside the Ministry of Finance, monitor regulations to strengthen financial stability and maintain banking prudence. We are currently evaluating how to further bolster our banking capital structures,” Airlangga concluded.
Summary
Former Bank Indonesia Governor Burhanuddin Abdullah met with President Prabowo Subianto and key economic ministers to discuss navigating current economic volatility. Drawing comparisons to the 2005 inflationary crisis, the session focused on leveraging historical policy lessons rather than specific currency intervention. The President tasked Finance Minister Purbaya Yudhi Sadewa with reviewing the proposed strategies to ensure fiscal and monetary synergy.
Officials emphasized that Indonesia’s economic fundamentals remain robust despite the recent minor depreciation of the rupiah. Government leaders are now prioritizing clear communication to manage public and market perceptions while strengthening financial stability. Coordinating Minister Airlangga Hartarto confirmed that the government is actively evaluating measures to bolster banking capital and maintain long-term economic resilience.