JAKARTA (Reuters) - Indonesia's reformist finance minister may be replaced by the end of February over her role in the bailout in late 2008 of a small bank, an official at a political party in the ruling coalition said on Monday.
The departure of Sri Mulyani Indrawati, a top reformer in President Susilo Bambang Yudhoyono's cabinet, would deal a severe blow to the president's drive to reshape Southeast Asia's largest economy that has won a broad praise from global investors.
The official from the Golkar Party, who declined to be quoted by name, told Reuters that Indrawati may be replaced "by the end of February," echoing a report on Monday in the English language daily newspaper the Jakarta Post that also quoted anonymous Golkar sources.
Golkar is headed by tycoon Aburizal Bakrie, an old-style politician who has long resisted Indrawati's reforms, resulting in tensions within Yudhoyono's government.
Bambang Soesatyo of the Golkar Party said Anggito Abimanyu, head of the fiscal policy agency within the finance ministry, would be the best replacement for Indrawati if she stepped down.
Local stocks <.JKSE>, the rupiah and bond prices showed a muted reaction to the reports, but investors kept a wary eye on the development, with the key focus on whether Yudhoyono would be able to find a successor capable of maintaining the reform drive.
"The markets are concerned about the continuity of reforms and policy. Market sentiment could turn bad," said Andry Asmoro, an economist at Bahana Securities. "The political risks are likely to increase if (she) quits."
Indrawati could not be reached for comment. The president's spokesman could not be reached either.
Both Indrawati and Vice President Boediono have come under attack from non-reformers over their decision to bail out Bank Century, a small lender.
Indrawati and Boediono, who was governor of the central bank at the time, both approved the government rescue of Bank Century late in 2008 as Indonesia started to feel the impact of the global financial crisis.
Analysts have priced in the possibility of Indrawati's ouster regarding the scandal over the 6.7 trillion rupiah ($729.4 million) government rescue of Bank Century, a Reuters survey showed last week.
Indrawati and Boediono were widely expected to play a critical role in attracting foreign investment into one of the region's fastest growing economies and a member of the Group of 20 leading economies.
Both technocrats have defended the decision during their testimony before a parliamentary inquiry committee, saying the decision was aimed at preventing the bank's troubles from spreading into a broad-based crisis.
President Yudhoyono was re-elected in July on the back of his government's economic policies, reforms, and efforts to tackle corruption.
(Reporting by Sara Webb, Telly Nathalia, Gde Anugrah Arka and Sunanda Creagh; Writing by Choonsik Yoo; Editing by Alex Richardson)