"This appointment will alleviate the heightened risk of policy gridlock in view of greater-than-expected contentiousness in the relationship between the government and its key coalition partners," it said on Monday.

It added Agus' appointment seemed to represent a stable compromise between the government and its main coalition partners.

"As such, we do not expect key fiscal policies and budget management goals to come under political attack or shift significantly from the credit-supportive positions set by the outgoing finance minister," Moody's said.

It stated that in his 25-year career as a banker and as a reformer of state-owned financial institutions, Agus built a reputation for strong management and personal integrity.

"These credentials will support the prioritization of second-generation reforms to deepen domestic capital markets, improve governance, and heighten transparency and accountability in the public sector," it added.

On account of his familiarity with financial and capital markets, Agus could boost the coordination between the Finance Ministry and Bank Indonesia, the country’s central bank.

 
Indonesia’s political and financial system and its government finances have come a long way since the 1997-98 Asian financial crisis. Its economy and credit fundamentals have also been resilient to the 2009 global economic crisis and the commodity shocks that preceded it.

These developments have resulted in two sovereign ratings upgrades since October 2007, to Indonesia’s current government bond rating of Ba2 with a stable outlook. The sovereign rating upgrades took place while many skeptics doubted the country’s policy fundamentals and financial stability.

"Against this backdrop, our view is that a deepening of domestic markets and/or a healthier and stable external payments position are key to complementing and sustaining headline improvements in credit ratios, anchoring market confidence, and maintaining the improving trajectory of the sovereign rating," Moody's said.

However, the broader reform thrust has become ensnared in personalized political rivalries, pitting reformists within the government against vested business and political interests, it further stated.

"Therefore, the recent transition at the Finance Ministry will likely ensure policy continuity and efficacy, represent a stable political compromise, and enhance policy coordination between fiscal and monetary authorities," Moody's said.