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span class="inline inline-left">Hatta Rajasa: (JP/P.J. Leo)Coordinating Economic Minister Hatta Rajasa'€™s appointment as acting finance minister has surprised observers who expected that a non-partisan technocrat would be named to replace outgoing Agus Martowardojo.

The State Palace confirmed on Friday that Hatta, the chairman of the National Mandate Party (PAN) and a potential contender in the 2014 presidential election, had picked up the portfolio of the finance minister following President Susilo Bambang Yudhoyono'€™s signature of Presidential Decision No. 45/M on the appointment earlier in the day.

Hatta, the father-in-law of the President'€™s son Edhie '€œIbas'€ Baskoro Yudhoyono, replaced Agus, who is slated to become governor of Bank Indonesia (BI) in late May.

Presidential spokesman Julian Aldrin Pasha said that Yudhoyono had opted for an acting minister since the President had yet to find the right replacement. '€œAlthough there are deputy ministers, there are still incomplete tasks.'€

Julian said that he did not know exactly when a new minister would be chosen, saying that Hatta'€™s appointment was temporary. '€œIt will not be until 2014.'€

Hatta, who graduated with a degree in petroleum engineering from the Bandung Institute of Technology (ITB), is now responsible for setting Indonesia fiscal policy at a moment when the nation faces significant economic challenges, including increasing inflation, a widening trade deficit, a weakening rupiah and potential slowdown in growth.

Hatta previously denied rumors that the President would appoint him as finance minister in addition to his current portfolio, saying that his tasks as coordinating economic minister had already made him extremely busy.

Although the President promised that Hatta would not head the Finance Ministry until 2014, Hatta may still lead the ministry during discussions on the 2014 state budget, which is expected to be passed in October or November this year.

Economists have warned that the appointment of politician to head the Finance Ministry in advance of the elections in 2014 would expose the nation to fiscal risks from politicians and political parties looking to benefit from the state budget.

As Hatta'€™s predecessor, Agus was known for his extreme fiscal prudence '€” an attribute that observers said frequently created friction between him and other political appointees in the Cabinet and eventually led to his ouster and soft landing at the central bank.

'€œThe fact that Hatta is also the chairman of PAN may raise questions over a political appointment to post of fiscal guardian,'€ Standard Chartered senior economist Fauzi Ichsan said after the announcement.

The appointment of Hatta was certainly not expected by the market, Fauzi said, adding that people had been expecting someone who had the background of a traditional technocrat, such as Investment Coordinating Board (BKPM) Chatib Basri or outgoing BI Governor Darmin Nasution, both of whom were previously touted as the strongest candidates to lead the ministry.

With no new person on the President'€™s economic team, Hatta'€™s appointment as acting finance minister means that the government may soon speed development of the Sunda Strait Bridge megaproject. The proposed bridge to connect Java and Sumatra has a US$20 billion price tag.

Hatta'€™s previous idea to use private funding to finance a feasibility study for the bridge would have created government obligations that were opposed by Agus, eventually leading development of the project to stall in Cabinet.