Analysts welcome Boediono's return<\/p>\n
Urip Hudiono, The Jakarta Post\/Jakarta<\/p>\n
Analysts have welcomed the likely comeback of former minister of
\nfinance Boediono to the Cabinet's economics team.
\n They said on Friday his proven track record as the architect of
\nthe country's return to a brief period of macroeconomic stability
\nafter the 1997 financial crisis was just what the beleaguered
\neconomy needed.<\/p>\n
Markets also greeted the news positively, with the Jakarta
\nStock Exchange Composite Index rising by as much as 2.1 percent
\nto 1,119.417 on Friday and the rupiah strengthening to Rp 10,005
\nagainst the U.S. dollar, from Thursday's Rp 10,033.<\/p>\n
The currency even rallied to an intraday high of Rp 9,990 to
\nthe dollar, after President Susilo Bambang Yudhoyono announced in
\nMedan, North Sumatra, he had invited Boediono to join his
\nCabinet's economics team, as part of a "limited reshuffle" to put
\nthe recently unsatisfactory macroeconomic management back on
\ntrack.<\/p>\n
Economist Kahlil Rowter of Mandiri Sekuritas told The Jakarta
\nPost that, if Boediono joined the economics team, the economy
\nwould have a greater chance of picking up as he was known for his
\nsuccessful maintenance of fiscal stability during his term.<\/p>\n
"He is well respected in economic circles -- both in the
\ncountry and abroad -- for his calm and careful attitude in
\ngetting things accomplished," he said.<\/p>\n
Standard Chartered economist Fauzi Ichsan, meanwhile,
\nemphasized Boediono's extensive experience, notably "in working
\ntogether with the central bank and House of Representatives".<\/p>\n
Boediono, who served as finance minister from 2002 to 2004, is
\ncredited for having been able to consistently reduce the state
\nbudget deficit, working with the central bank in maintaining
\nmacroeconomic stability in terms of inflation and interest rates,
\nand delivering Indonesia out of an International Monetary Fund
\n(IMF) program.<\/p>\n
Before becoming finance minister, Boediono had served as head
\nof the National Development Planning Agency (Bappenas) and Bank
\nIndonesia (BI) deputy governor.<\/p>\n
Indonesia's economy recently experienced a growth slow down to
\n5.34 percent, amid an inflation reaching 18.38 percent and
\ninterest rates of 12.25 percent, after the government increased
\ndomestic fuel prices on Oct. 1 as soaring global oil prices
\nthreatened the state budget's sustainability.<\/p>\n
Kahlil, however, suggested that Boediono should serve as
\nfinance minister, considering his track record, rather than as
\ncoordinating minister for the economy.<\/p>\n
"I think his experience as chief economics minister would be
\nquestionable, especially when the real sector currently needs
\nbreakthrough policies, while Boediono is known for being a
\ncareful policymaker," he said.<\/p>\n
He also criticized Boediono's "legacy" of setting a too low
\noil price assumption in the 2005 state budget and postponing
\ncash flow payments to state oil and gas firm PT Pertamina and
\nstate utility company PT PLN for budget prudence purposes, which
\nmay have contributed to this year's economic problems.<\/p>\n
"So there's pluses and minuses for Boediono," he said. "He is
\ngood at maintaining fiscal stability, but maybe not at making
\nstimulating economic policies."<\/p>\n
Meanwhile, Fauzi warned of a possible negative market reaction
\nif it turned out Boediono was not appointed finance minister or
\nchief economics minister as has been expected.<\/p>\n
"Boediono must be given strong fiscal authority. Some in the
\nmarket have even suggested him for both (finance and economics
\nminister)," he said.<\/p>",
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