Wahid cedes powers

Megawati Sukanoputri said to be unhappy about cabinet

Indonesia's President Abdurrahman Wahid has handed over wide powers to his deputy amid fears of a growing rift between the two.

Vice President Megawati Sukarnoputri has until now been sidelined in policy making even though she leads the largest party in the national parliament.

She was very shocked and surprised [at the list of names]

Subagyo Anam, Megawati aide

Under the new arrangement, Megawati is to chair cabinet meetings and review the performance of ministers.

She will also have a role in formulating government policy and priorities.

Despite the new powers, Mr Wahid has given Megawati's PDI-P party few posts in his controversial cabinet announced on Wednesday.

Problems

Indonesia's financial markets have taken a battering

The new slimmed-down team of 26 has been picked to tackle a myriad of problems from the country's ailing economy to separatist pressures across the archipelago.

But critics have accused Mr Wahid of surrounding himself with cronies and excluding Megawati backers.

A senior Megawati aide said she was "very shocked and surprised" at the new cabinet and disappointed Mr Wahid had not consulted her.

She failed to attend Wednesday's cabinet announcement, sparking fears of a deepening feud.

The list of ministers was entirely decided by the president and of course she is very disappointed

Subagyo Anam, Megawati aide

But she strongly denied speculation she would resign in protest.

Mr Wahid visited Megawati at her official residence on Thursday night for private talks to iron out their differences.

He has defended his choice of ministers and says his new line-up will be more professional than the former 35-member cabinet.

Powers

The power-sharing decree, made public on Friday, remains valid until 2004.

Megawati's main tasks include:

• Setting the agenda for the cabinet
• Determining the focus of government policies
• Chairing cabinet meetings and explaining results to the country
• Monitoring implementation of government policies
• Supervising ministers' performance

Mr Wahid has said he will focus on foreign affairs, national unity and humanitarian issues.

Financial markets fell following the announcement of his cabinet line-up and especially the choice of Prijadi Praptosuhardjo for finance minister, a man rejected earlier in the year as unfit to run a state bank.

But Indonesia's currency, the rupiah, strengthened on Friday after Megawati denied rumours she was planning to quit.

Economy

Meanwhile Indonesia's new economics minister, Rizal Ramli, has been outlining his ideas on tackling the country's economic problems.

Mr Ramli said he wanted to create more jobs in rural areas, and launch initiatives to attract foreign capital.

He also talked of providing loans to small and medium-sized enterprises.

Mr Ramli said he was due to meet representatives of the Central Bank and the International Monetary Fund to "accelerate the process of co-operation".

Mr Ramli has been a critic of the IMF which led a massive bail-out of Indonesia's economy in the late 1990s.