Bad day for markets, SBY mulls Cabinet shakeup

Bad day for markets, SBY mulls Cabinet shakeup

The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono said on Monday he would
evaluate his ministers in October, responding to rising calls for
an immediate reshuffle of the economic team amid a rapid
deterioration in the country's key economic indicators.

Susilo, who became president last October, had promised to
evaluate his Cabinet team after one year in office and to replace
ministers who did not perform.

"I will keep my promise on that," Susilo announced during a
gathering of editors here Monday, "I will evaluate the
performance of all my ministers."

More than 40 editors from leading Asian and European
newspapers are meeting in Jakarta for two days beginning Monday.
The event is organized by the Konrad Adenaur Foundation in
cooperation with The Jakarta Post.

Calls for the replacement of some ministers, especially
economic ministers, have increased of late, especially so now
that the rupiah has plunged to its weakest level since November
2001;the state budget deficit is under serious threat due to
soaring oil prices; and fuel shortages have plagued a number of
cities throughout the country in recent weeks. Some analysts
have suggested that the rupiah's decline was being exacerbated by
the lack of action from the government.

Susilo said he was responsible for the government's
performance and he would ask the ministers about what problems
they faced and what was needed to solve them.

"I will ask those who seem to have lost their initiative to
improve their performance," he told the Asian and European
editors at The Dharmawangsa.

Susilo's remarks, however, failed to lift sentiment in the
financial markets.

Jakarta shares on Monday tumbled to their lowest level since
late December 2004 as investors dumped stocks in panic selling on
the rupiah's continued losses. The Jakarta Stock Composite Index
plunged by 5.2 percent to close at 994.77. The rupiah closed at
Rp 10,840 per U.S. dollar, its weakest level since November 2001.

The government has been under pressure to cut its fuel subsidy
expenditures as soon as possible because rising global oil prices
were threatening the state budget. As global oil prices
increase, (nearly US$70 on Monday) the state oil company needs
more dollars to pay for its oil imports. These two factors are
the main pressure points on the local unit, which is worsened by
the slow response of the government, particularly with regard to
the politically sensitive fuel subsidy issue.

"The Cabinet team must be immediately changed because they
have not responded properly to the situation," said lawmaker
Effendi Choirie of the National Awakening Party (PKB).

A handful of legislators from the Golkar Party, normally
staunch supporters of this administration, are also making the
same call.

"To prevent the economic conditions from worsening further,
Susilo must not hesitate in replacing the economic team," said
Yudhi Krisnandi.

Meanwhile, Speaker of the People's Consultative Assembly (MPR)
Hidayat Nur Wahid said that evaluation of the Cabinet was
necessary to detect where things had gone wrong in managing the
economy.

But he added that any shakeup in the Cabinet was up to the
President to decide.