In her second cabinet reshuffle, Jokowi replaces the Minister of Finance Brodjonegoro with Sri Mulyani Indrawati. What does this say about the nation's balance sheet?
Since taking office in October 2014, President Joko 'Jokowi' Widodo reshuffled his cabinet twice. In its latest reshuffle last month, the president appointed 12 new ministers, which has unsurprisingly led to tumultuous past few weeks for the government. However, the attention of the mainstream media shines on Sri Mulyani Indrawati, who now takes more Bambang Brodjonegoro as finance minister.
But it is not the first time Sri Mulyani served. She was Minister of Finance from 2005 to 2010 under Susilo Bambang Yudhoyono (SBY), but resigned after a rescue incident Century Bank disastrous involving stolen money and a criminal owner who infamously enter history as one of greatest of transplantation of Indonesia. Sri Mulyani regretted the decision to approve the bailout, reportedly calling the decision a mistake. She then worked as director of the World Bank in Washington DC, lateral movement that kept his reputation intact.
Despite the incident Century Bank, Indonesians welcomed Sri Mulyani as one of the most authoritative economic policy makers in the world. During the tenure of SBY, she managed the balance sheet to the point where he was one of the most conservative in the world. It reduces the cost of the nation's debt to 30 percent of . GDP, and helped to stabilize the macro-economy of the archipelago. She made a name for itself as a manufacturer of prudent fiscal policy, and has helped strengthen investor confidence in the archipelago.
Go to work at the World Bank was a popular movement for Sri Mulyani among local politicians and business tycoons. According to Tony Prasetiantono, the Independent Commissioner of Permata Bank and chief economist at Bank Negara Indonesia, Jokowi was on a mission to bring Sri Mulyani return to Indonesia as Minister of Finance. She politely declined his first invitation to join the cabinet. In July, however, Jokowi has sent a personal letter to the Executive Director of the World Bank Dr Jim Yong Kim, pleading for the return of Sri Mulyani. Following this letter, she chose to return to his former role as finance minister of Indonesia.
Experts believe that the despair of Jokowi and the sudden return of Sri Mulyani are both signs that the country is on the verge of financial difficulties. In July, however, the Department of Political, Legal and Security Affairs said that Indonesia's economy as a whole has worked under the direction of Jokowi. She argued the rupee force is on the mend, while the nation has generated more income and the poverty rate is declining. Antara said those indicators that Jokowi convinced go ahead and use up to government subsidies that were originally allocated to education, welfare, and other areas.
The statement of the Ministry was immediately countered by Sri Mulyani. The finance minister said Acting tax revenue the country has indeed not reached the objectives set in the state budget for the next four years.
In 2014, the gap between actual government tax revenue and its . business target pointed to Rp.100 billion (US $ 7.63 billion). He did not improve next year, expanding to more than Rp.248 billion (US $ 19 billion). Sri Mulyani said it expects this year the gap to be smaller to Rp.219 trillion (US $ 16.72 billion). This is largely due to the government to revise its targets for tax revenue. Economist Faisal Basri said that all these things were failures of the previous minister of finance.
Bambang Brodjonegoro failed to promote the economy to foreign investors skeptical.
Sri Mulyani global reputation as a strict fiscal conservative - combined with his expertise and willingness to say "no" to the president -. Are probably what the firm needs at this time
Some say Brodjonegoro lacked these qualities of authority, which may have ultimately led to his ouster as finance minister.
Fithra Dr. Faisal is a former member of the office staff of the Tax Policy, Department of Finance. Today he is the CEO of a think tank called the Indonesian Progressive Institute. "It is not that we are in great difficulty, but we need her to bring confidence," he said in an interview with Faisal Indonesia Expat .
"regarding the state budget, the country is currently facing a shortfall, and Sri Mulyani is needed to clean up the mess."
Despite high hopes of the Government that a new tax amnesty program would allow an increase in turnover, the figures are far from their targets, so far pulling in a laughable Rp.84.46 billion (US $ 6.44 million) on a projection Rp.165 Trillion (US $ 12.5 billion), according to the Jakarta post. Faisal said he is still optimistic about the program in general, but not on its quantitative target. he said the main objective of Sri Mulyani this year will be to maintain the credibility of the state budget and fiscal policy, while promoting and monitoring of the tax amnesty program.
Sri Mulyani also proposed Rp.133 billion ($ 10.15 billion US) in cuts to the state budget, saying it was too high and did not provide realistic value, given the current economic situation of the nation. Without affecting the high-priority spending plans of the government on infrastructure and social assistance, Sri Mulyani plans to adjust expenses by reducing low priority Rp.65 trillion and institutional costs. She also wants to reduce Rp.68 trillion (US $ 5.2 billion) of regional transfer funds to reach a new state budget for 2016.
Following the appointment of Sri Mulyani as Minister of Finance July 27, the Jakarta composite index immediately spiked 1.3 percent, rising to 5.301 at the end of the trading day. The same day, the Indonesian rupiah has strengthened 0.5 percent against the US dollar. With these figures in mind, it is clear that market players see the return of Sri Mulyani as solid ingredient for the financial future of Indonesia.
Faisal appropriate. According to him, a figure economic confidence as Sri Mulyani, with a positive reputation internationally, will most likely strengthen the confidence of foreign investors in Indonesia. "I am very confident that Sri Mulyani can lead economic reform," said Faisal. "His experience to deal with the crisis of 2008 speaks louder than words."
Although experts and stakeholders in Indonesia are optimistic about the return of Sri Mulyani, the effects are yet to be seen and many do not want to count their chickens before they hatch. Cautiously optimistic observers, like Faisal, hope that it can become long-term financial deficits around the country, and a good example for future ministries.