Indonesia's newly appointed Finance Minister Purbaya Yudhi Sadewa speaks to journalists following his inauguration at the Presidential Palace in Jakarta, Indonesia, September 8, 2025. REUTERS/Willy Kurniawan

By Bernadette Christina

JAKARTA (Reuters) -Indonesia's Finance Minister Purbaya Yudhi Sadewa said on Tuesday that the rupiah is likely to strengthen in the fourth quarter, with capital inflows set to increase once foreign investors see economic growth is accelerating.

Purbaya took over from respected former minister Sri Mulyani Indrawati last month amid widespread protests across the country. Some economists blamed the protests on rising inequality and a lack of job opportunities in Southeast Asia's largest economy.

Purbaya told a press conference economic growth could reach 5.67% in the fourth quarter year-on-year, up from 5.12% in the second quarter, due to new government stimulus that would be announced soon.

That is higher than the 5.5% outlook the minister gave last week for the fourth quarter.

"I'm sure later in the fourth quarter, once they know the economy is heading in the direction of improvement, foreign capital will return and the rupiah will tend to be stronger than now," Purbaya told a press conference.

The government has been considering an additional stimulus package, which will come on top of a nearly $1 billion economic stimulus for the fourth quarter unveiled in September that consisted of food assistance and temporary construction work, among others.

The rupiah was down slightly on Tuesday to close at 16,570 a dollar. It has been among the worst performing emerging Asian currencies so far this year, weakening around 3% amid rising investor concerns about central bank independence and fiscal prudence after Sri Mulyani's departure.

Purbaya said the government ran a budget deficit of 371.5 trillion rupiah ($22.42 billion), equivalent to 1.56% of GDP, in January to September, bigger than the 1.1% of GDP in the same period in 2024. The deficit outlook for all of 2025 remained at 2.78% of GDP.

To cover some of the deficit, Indonesia will soon launch its first sale of dim sum bonds, which are bonds denominated in Chinese yuan issued outside of mainland China, a finance ministry official said.

Government revenues during the first nine months of 2025 fell 7.2% from a year earlier to 1,863.3 trillion rupiah, while total expenditure reached 2,234.8 trillion rupiah, 0.8% below the levels in the same period in 2024.

"This shows the budget remains adaptive and credible to maintain a balance between economic recovery and medium-term fiscal sustainability," Purbaya said.

($1 = 16,575 rupiah)

($1 = 16,570.0000 rupiah)

(Reporting by Bernadette Christina and Stanley Widianto; Writing by Gayatri Suroyo; Editing by David Stanway and Kim Coghill)