Indonesian Finance Minister Sri Mulyani Indrawati quit yesterday to take up a top job at the World Bank after months spent battling politicians bent on her ouster, sending share prices plummeting.
The surprise appointment as managing director of the World Bank Group was seen as a blow to economic reform in Southeast Asia’s biggest economy and triggered a sell-off on the Jakarta stock market as analysts looked for a credible replacement for the respected technocrat.
“The news is correct. I’m still waiting for the approval of the president. For the time being, I will continue to carry out my duties at the finance ministry during this transition week,” Indrawati, 47, told reporters.
PHOTO: REUTERS
The Indonesian stock market plunged 2.8 percent in morning trade after Indrawati confirmed her resignation from President Susilo Bambang Yudhoyono’s Cabinet.
“This is a shock to the index,” Bhakti Securities analyst Reza Nugraha said. “Investors have yet to see anyone credible to replace Sri Mulyani so they feel anxious. Shares will continue to fall for a while until investors know who will replace her.”
Yudhoyono praised Indrawati and said her new role as World Bank managing director was “strategic, important and honorable.”
He did not name a replacement despite revealing that he had known about the World Bank job since last week.
”I have to tell Indonesians that we have lost one of our best ministers. Sri Mulyani has worked hard to develop an accurate fiscal policy and carry out reform in the area of finance,” he said.
Indonesia now has no full-time central bank governor and no finance minister as it tries to attract billions of dollars in foreign investment deemed vital to maintaining high growth.
Chief Economic Minister Hatta Rajasa will temporarily take charge of the finance portfolio until Indrawati’s replacement is appointed, presidential spokesman Julian Pasha said yesterday. Indrawati is to take up her new job in Washington on June 1.
World Bank president Robert Zoellick said the economist and former IMF board member had guided Indonesia through the global recession and earned the “respect of her peers across the world.”
“I am delighted to announce the appointment of Sri Mulyani Indrawati. She has been an outstanding finance minister with in-depth knowledge of both development issues and the role of the World Bank Group,” he said.
In a World Bank press release Indrawati said: “It is a great honor for me and also for my country to have this opportunity to contribute to the very important mission of the bank in changing the world.”
She has stayed aloof from domestic politics despite being targeted with corruption allegations from party leaders intent on wrestling control of her ministry.
Indrawati announced her resignation a day after being questioned by anti-graft investigators probing the US$700 million bailout of mid-sized Bank Century in 2008. She has denied any wrongdoing.
Some analysts have traced her political problems back to 2008 when she upset the country’s most powerful tycoon, Golkar party chief Aburizal Bakrie, when she refused to shield his family’s Bumi Resources from a stockmarket sell-off in 2008.
She also clashed with Bakrie over unpaid mining royalties and taxes, and accused him of waging a public campaign to discredit her.
Indrawati’s uncompromising attitude to corruption — she punished almost 2,000 finance ministry personnel and dishonorably discharged at least 150 — also made her many enemies within the bureaucracy.
Despite the controversies, she has won plaudits as one of the main reformers responsible for putting in place the economic fundamentals that made her five years as finance minister a period of strong and steady growth.
“It’s a good move for her, but not good for Indonesia,” said Nick Cashmore, head of CLSA in Indonesia. “She’s leaving earlier than expected, not doing the full five years. It shows that all these undercurrents are gathering pace.”
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