By: Ronny P. SasmitaPurbaya bets on the future. Photo from Jakarta PostWhen Indonesia’s newly appointed Finance Minister Purbaya Yudhi Sadewa ordered the government’s excess budget balance (Saldo Anggaran Lebih, or SAL) to be injected into the banking system, it was more than a technocratic experiment. It was a statement of intent, a fiscal gamble that blends ambition with political risk. Behind the official rationale of “activating idle money” and stimulating growth lies a larger narrative: the return of fiscal populism in the post-reform era.The SAL, by design, is a prudential buffer, a rainy day fund meant to safeguard public finance during crises or revenue collapses. Redirecting it into banks converts that safety cushion into short-term stimulus. This shift, though politically seductive, undermines fiscal discipline. It leaves Indonesia with a thinner firewall just as the global economy faces synchronized uncertainty: slowing Chinese demand, volatile commodity prices, and post-pandemic structural adjustments.Broader shift in fiscal philosophyYet Purbaya’s move is not an isolated act. It forms part of a broader shift in Indonesia’s fiscal philosophy. Within weeks of his appointment, the new minister unveiled a series of bold initiatives: the creation of a Fiscal Acceleration Task Force, the introduction of Patriot Bonds to fund strategic projects, and the rechanneling of State Equity (PMN) into labor-intensive programs under the banner of “people’s economy.” Each of these reflects an appetite for rapid, visible results, a hallmark of political rather than technocratic policymaking.The Patriot Bond, for example, is marketed as an innovative patriotic investment vehicle that invites citizens to “co-own” the nation’s development. In theory, it widens domestic participation in infrastructure financing. In practice, it risks becoming a populist instrument to mask growing fiscal pressures. With the budget already stretched and global appetite for Indonesian bonds tightening, this “patriotism premium” could translate into costlier debt and opaque fiscal liabilities. The emotional appeal may buy temporary political credit but could erode investor confidence if transparency falters.Meanwhile, the State Equity Rechanneling plan, redirecting public capital from established SOEs to populist projects like koperasi merah putih and digital MSME initiatives, aims to democratize state resources. However, it blurs the line between fiscal policy and political messaging. Such programs can easily morph into vehicles for patronage, particularly when targeted toward large voter blocs rather than productivity gains. The echoes of the New Order’s state-directed credit system are unmistakable.Threat to central bank’s autonomyInstitutionally, the SAL injection itself marks a quiet encroachment on the central bank’s independence. Liquidity management has long been the domain of Bank Indonesia, not the Finance Ministry. By injecting fiscal reserves directly into banks, Purbaya effectively transforms the ministry into a liquidity manager, a function historically reserved for monetary authorities. This not only blurs institutional boundaries but also risks politicizing the credit channel. Once politics enters the bloodstream of liquidity policy, neutrality becomes an illusion.The political economy logic is clear. As Indonesia enters a new electoral cycle, the pressure to sustain high growth and populist spending intensifies. Fiscal restraint is rarely a winning slogan; fiscal activism, on the other hand, sells well. Injecting idle funds, promoting “patriotic” bonds, and pushing populist cooperative programs create the image of a government that acts swiftly and boldly, even if the long-term costs are deferred.But fiscal populism is a dangerous habit. It trades prudence for spectacle and stability for speed. The history of Indonesia’s financial management offers painful lessons. In the 1980s and 1990s, politically directed lending to “strategic sectors” under the New Order created an illusion of prosperity, until it collapsed into systemic crisis during the 1997–1998 meltdown. Banks were forced into bad loans, the government into massive bailouts, and the public into decades of debt repayment. The present direction, if unchecked, risks reviving that same cycle of financial repression: using the banking system to fund political ambitions under the guise of national interest.Borrowing from the futureThere are also intergenerational implications. Every rupiah of SAL spent today on politically convenient projects is a rupiah less available to cushion future crises. It’s a form of borrowing from the future without parliamentary debate. The same holds for the Patriot Bond: tapping citizens’ savings to finance projects that may lack economic rigor is, in essence, a transfer of long-term risk to ordinary Indonesians.Defenders of Purbaya’s approach argue that Indonesia’s growth model needs bold experimentation to escape the “middle income trap.” That may be true. But boldness without prudence is recklessness. Fiscal innovation must be matched with institutional guardrails, transparent reporting, parliamentary oversight, and clear separation between fiscal and monetary domains. Without these, “innovation” becomes a euphemism for opportunism.The danger of fiscal populism is not just macroeconomic. It’s psychological. Once the public and political class internalize the idea that fiscal reserves and patriotic bonds are limitless tools for nation-building, the very culture of restraint erodes. Indonesia’s post-crisis reform architecture, built painstakingly since 1999, rests on one principle: credibility. Undermining that credibility for political expediency may not cause an immediate collapse, but it corrodes the foundation upon which future stability depends.Indonesia today enjoys one of the lowest debt-to-GDP ratios in emerging Asia. That fiscal space is an asset, not a license. If Purbaya’s policies continue down the path of monetized populism, that space could vanish faster than it was built. Populism, once institutionalized, is almost impossible to reverse. The applause it generates today can quickly turn into a financial hangover tomorrow.Indonesia’s fiscal trajectory has long been admired for its prudence. The challenge now is whether that reputation can survive the allure of quick wins and populist optics. Minister Purbaya’s vision of an “activated fiscal engine” may sound transformative, but without guardrails, it risks transforming Indonesia’s hard-earned stability into a political liquidity trap.Ronny P. Sasmita is a Senior Analyst at Indonesia Strategic and Economics Action Institution