Indonesian President Susilo Bambang Yudhoyono announced Monday the much-awaited reshuffle for the economic team with seasoned technocrat Boediono replacing Aburizal Bakrie as the coordinating minister for the economy, which is widely expected to help enliven the country's sluggish economy.
Boediono entered the cabinet as co-ordinating minister for economic affairs while Aburizal Bakrie was rotated from co- ordinating minister for economic affairs to co-ordinating minister for people's welfare, according to the president's announcement made at Gedung Negara in Yogyakarta.
Sri Mulyani was rotated from state minister of national development planning to minister of finance and Fahmi Idris was rotated from minister of manpower and transmigration to minister of industry, while Erman Suparno was named as minister of manpower and transmigration and Paskah Suzetta as state minister of national development planning.
Those fired from the cabinet by the president were Minister of Finance Yusuf Anwar, Minister of Industry Andung Nitimihardjar and Co-ordinating Minister for People's Welfare Alwi Shihab.
Local analysts and the market have widely welcomed the comeback of former Minister of Finance Boediono to the economic team.
His proven track record as the architect of the country's return to a brief period of macroeconomic stability after the 1997 financial crisis was just what the beleaguered economy needed, the Jakarta Post once quoted analysts as saying.
If Boediono joined the economics team, the economy would have a greater chance of picking up as he was known for his successful maintenance of fiscal stability during his term, said economist Kahlil Rowter.
Standard Chartered economist Fauzi Ichsan, meanwhile, emphasized Boediono's extensive experience, notably in working together with the central bank and House of Representatives.
Boediono, who had served as finance minister from 2002 to 2004, was credited for having been able to consistently reduce the state budget deficit, working with the central bank in maintaining macroeconomic stability in terms of inflation and interest rates, and delivering Indonesia out of an International Monetary Fund ( IMF) program.
Before becoming finance minister, Boediono had served as head of the National Development Planning Agency and deputy governor of Bank Indonesia (BI).
Meanwhile, analysts said that the new economic team spearheaded by Boediono would have to do two things first.
"The first is to better coordinate the government's fiscal policies with the central bank's monetary policies; the second is to maintain stability in the country's financial sector -- in the mutual funds market, for example -- which has more or less affected investor confidence and caused volatility in the rupiah," said Kahlil Rowter.
Kahlil explained that as Bank Indonesia (BI) was at present maintaining a tight monetary policy by hiking interest rates to cope with the current rise in inflation, the government also needed to be contractionary in its fiscal policies.
Fauzi Ichsan, however, said that it was increasing government spending that Boediono needed to focus on for the sake of higher economic growth, as well as pushing ahead with reform, including more privatization.
In a plenary session of the Indonesian Science Academy on Saturday, Boediono presented a paper assessing the current economic situation, in which he underlined the importance of political and economic harmony, as well as coherent policies within the government's economic team, if macroeconomic stability was to be achieved.
He also warned that macroeconomic stability should never be take for granted, and that prudent budgetary policies, including reducing the deficit and debt stock, should always be pursued. It was also essential to press ahead with reform in the area of governance.
Indonesia's economy recently experienced slow growth rate at 5. 34 percent, with inflation rate of 18.38 percent and interest rates of 12.25 percent, after the government increased domestic fuel prices on Oct. 1 as soaring global oil prices threatened the state budget's sustainability.