(Bloomberg) — Finance Minister Sri Mulyani Indrawati announced on Tuesday that she would be selling Indonesian assets after President-elect Prabowo Subianto asked her to remain in the new government, just days before taking office this weekend. rose.
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The rupiah rose just 0.2% in early trade to 15,535 rupiah to the dollar, outperforming the rupiah of emerging Asian countries. Jakarta’s benchmark stock index rose as much as 0.9% as Asian stocks rose, extending its rise into a third day.
Indrawati confirmed the offer on Monday at her home as dozens of ministerial candidates emerged from marathon talks with Indonesia’s next leader. Winning her support would be a major victory for Prabowo as he seeks to accelerate growth in Southeast Asia’s largest economy.
“Sri Mulyani’s leadership at the Ministry of Finance can definitely allay some of the fears about Indonesia’s fiscal risks,” said Vishnu Varasan, head of economics and strategy at Mizuho Bank Singapore.
Indrawati, a former World Bank managing director, is credited with solidly contributing to the country’s fiscal health during much of President Joko Widodo’s 10-year rule. When asked by reporters if he would join Prabowo’s cabinet, he said with a smile, “I will support him in any way I can.”
Prabowo said everyone in attendance expressed a desire to join his team. Sukhumi Dasko Ahmad, from Mr Prabowo’s team, said the finance minister would likely consult his family, adding that “everything is still in flux” until the next president’s swearing-in on October 20.
Indonesia’s new leader is scheduled to meet again with cabinet candidates on Tuesday. Prabowo is expected to announce his cabinet members after taking the oath of office.
If Indrawati accepts Prabowo’s offer, it will be his third term as Indonesia’s finance minister. She first took on the role during the reign of President Susilo Bambang Yudhoyono, and again in 2016 under the Jokowi administration. Her willingness to join Prabowo’s cabinet appears to be a reversal from earlier this year, when she considered quitting Jokowi’s cabinet over her support for the former military commander.
“Sri Mulyani’s appointment will immediately strengthen the rupiah, bonds and equities as there is no longer any uncertainty in the new finance minister’s policies,” said Ahmad Mikhail, economist at PT Skor Securitas. .
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He added that given Indonesia’s track record of prudent budget management, where fiscal deficits have consistently remained below 3% of gross domestic product, Indonesia is likely to be on track to lower borrowing costs and raise its credit rating.
Others were more cautious. Lionel Priyadi, macro strategist at PT Mega Capital Securitas, said while Indrawati’s qualifications will help boost market confidence, it is not enough.
“The market is not necessarily euphoric because it is also focused on the fundamental challenges facing the Indonesian economy,” he said. “This is how the whole government can overcome the economic challenges ahead, including the global economic downturn, commodity prices and the potential for a widening current account deficit.”
–With assistance from Matthew Burgess and Prima Wirayani.
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