When Boediono took over Indonesia's Finance Ministry in August, 2001, the country's economy and financial system were still in trouble almost five years after the Asia crisis of 1997-98. Blind cleric Abdurrahman Wahid had just been impeached as President after a disastrous 21-month rule. During that time, the rupiah depreciated 38%, billions of dollars in private investment capital fled the country, and the governor of the central bank, Bank Indonesia, went on trial for corruption. And new President Megawati Sukarnoputri's economic team seemed as devoid of leadership as that of her predecessor.
Admirers of Boediono, 60, who uses just one name, point out that the former college economics professor immediately took charge, single-handedly steering Indonesia onto a strong growth path. Drawing on political skills picked up in an earlier stint as planning minister, he secured a direct reporting line to Megawati. Then the Wharton School economics PhD persuaded the International Monetary Fund to resume a debt program after a one-year hiatus. "It was very clear that the first priority must be instilling some sense of normality for the macroeconomy before we could do anything," he says.
Throughout 2002, Boediono administered sober fiscal discipline to shore up the economy. Under his direction, the government reined in its budget, and Bank Indonesia issued more short-term treasuries to soak up excess liquidity in the markets. IMF and World Bank economists say the program pushed down interest rates and inflation by double digits. That bolstered confidence in the government, which propped up the severely weakened rupiah, increased foreign currency reserves, and slowed the rate of capital flight. As a result, the economy grew 4% in 2002.
Boediono hasn't yet made progress on more politically difficult reforms: lifting gasoline subsidies, cracking down on rampant corruption, and collecting more taxes. But outsiders are nonetheless impressed. "The minister of finance keeps his eye on the ball," says Andrew Steer, director of the World Bank office in Jakarta. Thanks to Boediono, the country is no longer on the brink of disaster -- and has a shot at conquering some chronic woes.