Sjafruddin Prawiranegara established the Emergency Government of the Republic of Indonesia (Pemerintah Darurat Republik Indonesia, PDRI) in West Sumatra.
Sjafruddin Prawiranegara (EYD: Syafruddin Prawiranegara; 28 February 1911 – 15 February 1989) was an Indonesian statesman and economist. He served as the head of government in the Emergency Government of the Republic of Indonesia, as Minister of Finance in several cabinets, and was the first Governor of Bank Indonesia between 1951 and 1958. He was also the prime minister of the Revolutionary Government of the Republic of Indonesia (a shadow government set up in opposition to the central government of Indonesia).
Originating from Banten with Minangkabau ancestry, Sjafruddin became active in politics after his education in law. By 1940, he was working at a tax office, and joined the nationalist movements during the Japanese occupation of 1942-1945. Due to his closeness to revolutionary leader Sutan Sjahrir, he was appointed finance minister in the Republican government during the Indonesian National Revolution of 1945–1949. In this capacity, he lobbied for and distributed the Oeang Republik Indonesia, a predecessor currency to the Indonesian rupiah. Despite his socialist views, he joined the Islamic Masyumi party. In December 1948, a Dutch offensive captured the Indonesian revolutionary leaders including President Sukarno, resulting in Sjafruddin activating contingency plans and forming the Emergency Government of the Republic of Indonesia on 22 December 1948. For seven months in West Sumatra, he became the head of government of Indonesia, allowing the government to continue functioning and ensuring continued resistance.
Following the Roem–Van Roijen Agreement – which he had opposed – he returned his governing mandate to Sukarno in July 1949. With Indonesia now independent, Sjafruddin was first appointed deputy prime minister, then reappointed as finance minister until 1951. One of the party's leaders and its most prominent economic policymaker, he maintained a conservative approach to government budgets and established a foreign exchange certificate system. In order to reduce money supply and curb inflation, he formulated the "Sjafruddin Cut" policy which involves physically cutting Dutch-issued banknotes in half. He then became the first governor of Bank Indonesia, where his general accomodative approach to foreign capital and opposition to nationalization caused tensions with the Sukarno government and economists such as Sumitro Djojohadikusumo.
A pragmatic policymaker, he espoused religious socialism and based his views on a liberal Islamic interpretation and was a staunch opponent of communism. His opposition to Sukarno's Guided Democracy along with Dutch–Indonesian tensions caused a significant split between Sjafruddin and the Sukarno government. Escaping to Sumatra, he made contacts with dissident army officers and began openly criticizing the government. While initially reluctant to spark a civil war, in February 1958 he became leader of the Revolutionary Government of the Republic of Indonesia in West Sumatra. The rebellion was soon defeated, and after three years of guerilla warfare Sjafruddin surrendered to the government in 1961. Imprisoned until 1966, once released he became a vocal critic of the New Order government for its corruption and imposition of the principle of Pancasila to religious and social organizations until his death in 1989. Despite opposition from the armed forces, he was declared a National Hero of Indonesia in 2011.