Jay Solomon and Kate Linebaugh, Jakarta – Indonesian President Suharto Monday decided on a reshuffle at the country's central bank, reasserting control over economic policy following nearly a two-week absence from his daily duties due to ill-health.

Also Monday, Suharto recommitted the government to the package of reforms negotiated with the International Monetary Fund at a meeting with the country's business elite.

But while analysts welcomed the signs that Suharto is back in charge of the day-to-day running of the government - after worries about his condition caused severe jitters in local financial markets in recent weeks - they said the reshuffle at Bank Indonesia could have troubling implications for the economy.

Many interpreted the move to replace four central bank directors as a step toward curbing the influence of the central bank's well-respected governor, Soedradjad Djiwandono.

'It's like Suharto has suddenly clipped his wings,' said one analyst close to Bank Indonesia.

Analysts said there's growing speculation that Soedradjad won't be reappointed as governor in a cabinet reshuffle that will take place following presidential elections in March.

That could have important implications at a time when Indonesia is implementing the terms of a nearly $40 billion bailout organized by the International Monetary Fund.

As reported, Suharto issued a decree Monday which removes, effective immediately, four of Bank Indonesia's directors - Deputy Governor Paul Soetopo, Managing Director Hendrobudiyanto, head of the bank's Legal and Banking Department Heru Soepraptomo, and head of Bank Indonesia's Logistics Department Mansyurdin.

The new directors are Iwan Prawiranata, the president-director of state-owned PT Bank Bumi Daya; Aulia Pohan, currently a junior director at Bank Indonesia; Miranda Goeltom, deputy assistant for monetary affairs to the coordinating minister for economy and finance; and Sjahril Sabirin.

One suspicion is that the four directors were ousted because of bitterness in the Suharto family about Bank Indonesia's recent shuttering of commercial banks owned by first family members, one of the conditions of the IMF bailout.

Of the 16 that were liquidated under the International Monetary Fund-led program, three - PT Band Andromeda, PT Bank Jakarta, and PT Bank Industri - were owned by the first family. Both President Suharto's middle son Bambang Trihatmodjo, owner of Bank Andromeda, and half-brother Probosutedjo, owner of Bank Jakarta, have threatened legal action against the central bank and the finance ministry for the closures.

Soedradjad's loyalists at the central bank could be taking the heat for that decision, according to sources close to the central bank.

Indeed, the sources say Soedradjad wasn't consulted by Suharto about the management changes, which were issued from the palace as a presidential decree. Instead, the decision was passed on by Suharto's top economic advisor Widjojo Nitisastro.

But some economists welcomed the measures, saying the new appointments could inject some new blood into the central bank management.

'I think it's unfair to say the new directors are just favorites of the President,' said Rizal Ramli, an influential Indonesian economists. 'Suharto just got to the point where he needed to resolve issues in the banking sector and decided to inject people with more decisive character.'

Critics have charged that Bank Indonesia has been lax in regulating the banking industry over the past few years, part of the reason for the current economic crisis. Hendrobudiyanto was the Bank Indonesia director in charge of banking supervision.

Suharto also took to the offensive Monday by hosting a gathering of virtually all of the Indonesia's top businessmen at the Palace. Present at the meetings where the chairman's of such massive, ethnic-Chinese conglomerates, as the Salim, Sinar Mas, and Lippo Groups, as well as five of the six Suharto children - all of whom are active in business.

A copy of the speech showed that Suharto recommitted the government to implementing the IMF package and to balancing the budget next year. The president also asked for greater coordination between government and the private sector in handling the current economic crisis and for the private sector to take steps to renegotiating their loans.

A special task force has been set up to facilitate this coordination, Suharto decided.

Suharto also outlined a potential government plan whereby dollar-denominated funds would be issued at low rates to cash-strapped local companies. The President said that this could calm market jitters and keep foreign exchange within Indonesia.

But as a transcript of the meeting illustrates, some of the businessmen themselves didn't seem to agree with Suharto's solution. The scheme, noted Sofyan Wanandi, Chairman of the Gemala Group, could actually undermine confidence in the rupiah as it appears 'the government itself doesn't have confidence in the rupiah.'