Indonesia's Payment Balance Deficit, This Is The Cause

JAKARTA - Bank Indonesia (BI) recorded the Indonesia Payment Balance (NPI) in the third quarter of 2023 still recorded a deficit of 1.5 billion US dollars, this figure is lower than the deficit in the previous quarter of 7.4 billion US dollars.

Head of Bank Permata economist Josua Pardede said the balance of payments deficit decreased as the Transaction Balance (CA) and the Financial Transaction Balance (FA) in the third quarter of 2023 recorded a lower deficit than the previous quarter, which pushed for a decrease in the overall payout balance deficit.

The Indonesia Payment Balance (NPI) in the third quarter of 2023 recorded a deficit of 1.46 billion US dollars compared to a deficit of 7.37 billion US dollars in the previous quarter. With the Indonesia Payment Balance which is still recorded as a deficit, foreign exchange reserves at the end of the third quarter of 2023 fell to 134.86 billion US dollars from 137.54 billion US dollars.

"The transaction took place in the third quarter of 2023, recording a deficit of US$0.86 billion or equivalent to 0.25% of GDP, compared to a deficit of US$2.21 billion or equivalent to 0.61 percent of GDP in the previous quarter," he explained to VOI Tuesday, November 21.

Josua said that based on its components, the balance sheet recorded a surplus of 10.27 billion US dollars, slightly higher than the second quarter of 2023 which recorded a surplus of 10.13 billion US dollars. The solid balance of goods in the third quarter of 2023 was driven by the improvement in non-oil and gas exports accompanied by a decrease in non-oil and gas imports.

Meanwhile, the service balance recorded a deficit of 4.1 billion US dollars from the previous deficit of 4.73 billion US dollars. The decline in the balance of services deficit was driven by the increase in foreign tourist visits to Indonesia.

Cumulatively, although foreign tourist visits in the third quarter of 2023 grew to slow down by 64.87 percent yoy from the previous 169.66 percent yoy in the second quarter of 2023, the trend of foreign tourist visits continued to increase.

On the other hand, Josua said that outbound tourists from Indonesia tend to stagnate in the third quarter of 2023, especially after the Hajj season ends. Meanwhile, primary income decreased due to a decrease in revenue from direct investment in Indonesia. The deficit for direct investment income fell to USD4.65 billion from the previous USD5.70 billion.

According to Josua, the two main components of the balance of financial transactions where the deficit in portfolio investment tends to widen and the direct investment surplus decreases in the third quarter of 2023, but the other balance of investments recorded a surplus in the third quarter of 2023.

"The portfolio investment deficit widened to 3.13 billion US dollars from a deficit of 2.63 billion US dollars in the second quarter of 2023, as foreign capital flows from the domestic financial market continued due to the Fed's sentiment," he explained.

Meanwhile, direct investment surplus also fell to USD 2.77 billion from USD 3.98 billion because foreign investors tend to wait and see before the presidential election. Unlike these components, other investments recorded a surplus of USD 0.12 million, mainly because private companies withdrew foreign loans in the third quarter of 2023.