'As Good As It Gets'.(Indonesia's economy and President Susilo Bambang Yudhoyono's economic policies)

Byline: Solenn Honorine and George Wehrfritz

Indonesia is managing the global recession better than most, thanks to its tough finance minister.

Last month a financial tidal wave washed over Indonesia, but not the one kicked up by the global credit crisis. Money flooded into government coffers from individuals and corporations eager to avail themselves of Jakarta's "sunset policy" on tax delinquency, which forgave past evasions in exchange for good behavior going forward. The exact size of the surge isn't yet known, but economists estimate that tax receipts were up more than 50 percent for the year. "We saw quite a big jump" in revenue in December from "taxpayers who never existed [on the tax rolls] or want to correct mistakes made in the past," says the plan's creator, Finance Minister Sri Mulyani Indrawati. Indonesians, she adds, are honoring their tax obligations "in a much more accurate way."

The influx marks a major triumph for Indonesia's current government and, in particular, for the woman who put Jakarta's financial house in order. Over the past four years, Mulyani has helped dismantle the financial architecture of the crony capitalism built by strongman Suharto before his 32-year reign ended in 1998. She has pressed hard to slash debt, both public and private; pushed through a rollback of budget-busting fuel subsidies; and overseen sweeping reforms of the customs and tax authorities--positioning Indonesia to post the world's best (or at least the least bad) emerging-market growth story in 2009. Unnoticed until recently, Jakarta's conservatism is now the envy of the developing world, and Mulyani is being hailed as a model regulator. "She could be the finance minister anywhere in the world," says James Castle, founder of the consultancy CastleAsia. "She's that good."

Largely to Mulyani's credit, the country's balance sheet is now among the most conservative in the world; government debt now sits at just 30 percent of GDP, down from more than 100 percent a decade ago, while Indonesia Inc. is far less leveraged than its peers elsewhere in Asia. Despite that relative austerity, growth is being driven both by commodities--Indonesia's traditional mainstay--and by strong domestic consumption from a population approaching 240 million. And neither the commodity bust (which has also driven down the price of the imported energy on which Indonesia depends) nor tighter global credit looks set to hobble a country that, from the household to the boardroom and cabinet chambers, is all but debt-free.

Indeed, Indonesia is one of just three major emerging economies forecast to grow faster than 4 percent in 2009. The other two--China and India--have decelerated more rapidly in recent months ...