In a rare and remarkably candid interview with Bloomberg News at his hilltop estate in Hambalang, Indonesian President Prabowo Subianto delivered a defiant message to markets: you do not understand me, but you will.
The weekend sit-down — Prabowo's first major interview with an international media outlet since taking office — covered everything from credit rating agencies to tycoon corruption, the MSCI debacle, and his vision for Indonesia's fiscal future. And in every answer, the former special forces commander projected an image of absolute certainty, even as markets remain deeply skeptical of his government's economic management.
Prabowo called credit rating agencies "wrong" in their assessment of Indonesia's fiscal trajectory, arguing that their models fail to account for the country's long-term growth potential and natural resource endowments. He blasted the officials who mishandled MSCI Inc.'s concerns about market transparency in January — a saga that triggered a sharp selloff in Indonesian equities — as guilty of "clear maladministration" and "idiocy." He confirmed he is weighing litigation against the former officials for what he characterized as a dereliction of duty.
"The markets are not understanding me," Prabowo told Bloomberg, quoting Shakespeare and Abraham Lincoln in the same breath. "How can a military man understand economics? I just do what I think is in the best interests of my people."
The MSCI reference is particularly significant. In January, MSCI flagged concerns about transparency and governance in Indonesia's equity markets, threatening a potential downgrade in its market classification. The miscommunication between Indonesian regulators and MSCI — in which key correspondence allegedly went unanswered — wiped billions from the Jakarta Composite Index (IHSG) and shook foreign investor confidence. Prabowo's public acknowledgment that the failure was internal, and his willingness to name it as such, marks a notable shift in his administration's approach.
On fiscal policy, Prabowo struck a more measured tone. In a separate Bloomberg report from the same interview, he stated that he would only consider breaching Indonesia's statutory 3% budget deficit cap in an emergency — specifically if oil prices remain elevated for a sustained period due to the US-Israel war in Iran. "We must live within our means," he said, while acknowledging that the current $100-plus oil environment is stress-testing government assumptions.
The budget deficit has become a central concern for markets. Indonesia's 2026 state budget was built on an oil price assumption of $82 per barrel. With Brent crude hovering above $100 following the Strait of Hormuz crisis, coordinating minister Purbaya Yudhi Sadewa acknowledged last week that scenarios now show the 3% cap will be "hard to keep." Each Rp100 depreciation in the rupiah against the dollar increases state spending by approximately Rp6.1 trillion — more than the Rp5.3 trillion revenue boost — widening the deficit on a net basis.
Perhaps most notably, Prabowo defended his newly created sovereign wealth fund Danantara, dismissing comparisons to Malaysia's scandal-plagued 1MDB. He argued that Danantara would generate billions in returns through professional management of state assets, while maintaining strict governance standards. He also defended his nephew's appointment as a Bank Indonesia deputy governor, saying talent should not be disqualified by family ties.
For IHSG investors, the interview is a double-edged sword. On one hand, Prabowo's willingness to engage directly with international media and acknowledge past failures suggests a maturing approach to market relations. On the other, his combative tone toward credit raters and tycoons — combined with the unresolved deficit question — leaves considerable uncertainty. Foreign investors pulled over $2.3 billion from Indonesian equities in the year to date, and the rupiah continues to trade near 17,000 per dollar.
The market will have its say this week, with the Federal Reserve meeting on Tuesday and Wednesday adding another variable. For now, Prabowo's message is one of defiance: he believes Indonesia's fundamentals will eventually vindicate his policies, and he is willing to wait for markets to catch up.