Indonesian President Joko Widodo picked Sri Mulyani Indrawati as his new finance minister, returning her to a post she held six years ago in which she built up a reputation as a tough technocrat and reformer.
Indrawati, 53, will replace Bambang Brodjonegoro in the second cabinet reshuffle since the president — known as Jokowi — took office just under two years ago. It signals his commitment to push through an ambitious infrastructure program to transform Southeast Asia’s largest economy, and meet a pledge of boosting growth to 7 percent.
During her term as finance minister between 2005 and 2010, Indrawati steered the economy through the global financial crisis, helped to spur investment and curbed inflation. Still, her tenure was marred by an opposition campaign accusing her and then-Vice President Boediono of abusing their authority. She resigned in 2010 to join the World Bank as one of three managing directors.
Indrawati’s appointment will “be seen as a way for Jokowi to consolidate his grip on the economic agenda,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore. Jokowi’s new cabinet also strengthens his political foundations and calling it a “Dream Team will not be too much of an exaggeration,” he said.
The Jakarta Composite Index gained as much as 1.5 percent after the news of her appointment, and was 1.1 percent higher at 5,281.84 as of 12 p.m. local time. The rupiah rose 0.4 percent to 13,117 against the dollar, taking its gain this year to 5.1 percent.
Indrawati faces the challenge of boosting growth while keeping the budget deficit under control. Under Brodjonegoro, the country missed its growth and tax revenue targets last year as falling commodity prices curbed revenue from exports such as oil and rubber. The government is forecasting a budget deficit of 2.35 percent of gross domestic product for this year.
The economy grew at a slower pace of 4.9 percent in the first quarter, the statistics office said in May. Exports have remained weak and it’s likely there will be limited improvement in growth in the second quarter, Bank Indonesia said last week. It forecasts expansion of 5 percent to 5.4 percent in 2016.
“I will dedicate all my efforts to accelerating Indonesia’s development agenda with the goal of providing more and better services, particularly to the poor, and ensuring that all citizen will be able to participate in the benefits of a thriving economy,” Indrawati said in a statement on Linked-in.
Jokowi has in recent months consolidated power in parliament after Golkar, the nation’s second-largest political party, backed his government. With a two-thirds majority, Jokowi has been able to push through changes including a tax amnesty aimed at repatriating billions of dollars that the government plans to use for infrastructure.
In August last year, Jokowi replaced six ministers in a move he said was needed to reinvigorate infrastructure spending and make the country more attractive to foreign investment. The president has warned in the past that he won’t hesitate to get rid of under-performers.
Jokowi on Wednesday named Brodjonegoro as national planning minister and picked Wiranto, a former defense minister and commander of the Indonesian military, as coordinating minister for security affairs.
Other appointments include:
- Luhut Panjaitan as coordinating minister for maritime affairs
- Budi Karya Sumadi as transport minister
- Enggartiasto Lukita as trade minister
- Airlangga Hartarto as industry minister
- Archandra Tahar as energy and mineral resources minister