M

. Chatib Basri ' who was installed on Tuesday as the new finance minister to replace Agus Martowardojo, who is to head Bank Indonesia (Central Bank) ' had all along been the front-runner and most qualified candidate to lead the fiscal management all along.

Chatib fulfills all the fundamental requirements to lead the fiscal management 'he is not affiliated with any political party and possesses macroeconomic knowledge, impeccable integrity, a strong personality and enough political courage to resist any pressure for populist measures from political and government leaders.

Chatib is a highly respected technocrat, lecturer and formerly a researcher at the prestigious Jakarta School of Economics of the University of Indonesia. Yet, even more advantageous in his new Cabinet portfolio is that Chatib served as a special advisor to then finance minister Sri Mulyani Indrawati in 2006-2010.

A former commissioner at several foreign and national companies and member of the Presidential Council of
Economic Advisors, he clocked-up many years of experience in dealing with the macroeconomic landscape and the real business world.

Chatib's experience in dealing with the business world, including a year as chairman of the Investment Coordinating Board, will help him in assessing proposals for tax holidays and other fiscal incentives for new investors and fiscal guarantees for infrastructure projects under the public-private partnership (PPP) scheme. He is, thus, well informed on what businesses need, what kind of macro- and micro-economic policies make businesses thrive.

In comparison to his predecessor Agus, who took over from Sri Mulyani in June 2010 after Indonesia fully recovered from the 2008 global economic crisis, a string of uphill challenges are immediately confronting Chatib.

Most urgent and challenging for him is preparing for the House of Representatives proposed amendments to the 2013 state budget to control fiscal deficit below the maximum 3 percent of gross domestic product allowed by the law, and designing a social safety net program that will be implemented together with the upcoming energy reform to reduce fuel subsidies.

No less daunting is the urgent improvement needed in speeding up budget execution, which Agus failed to achieve due to bureaucratic inertia and political meddling into budgeting management at the various ministries.

In the first quarter, according to Deputy Finance Minister Anny Ratnawati, only 5.6 percent of the Rp 194 trillion (US$19.78 billion) budgeted for capital expenditure ' mostly for infrastructure projects needed to solve distribution bottlenecks ' had been disbursed or spent. The budget execution was even 2 percent lower than a year earlier.

He only has about two months to prepare the draft state budget for 2014, which the President must propose to the House in mid-August.

Strong coordination between the fiscal and monetary authorities has become even most imperative now in view of the uncertainty in the global economy and the upcoming legislative and presidential elections in 2014 when the President, most Cabinet members and lawmakers will be preoccupied with the agenda of their respective political parties.

Agus' experience at the Finance Ministry will enable him to coordinate with the fiscal authority (Chatib) and other financial regulators such as the Financial Services Authority and the State Deposit Corporation.

Put another way, both the finance minister and the central bank chief will together function as the autopilot of the country's economic-management for the next 16 months.