Bank Indonesia Records Indonesia's Balance of Payments Surplus of 4 Billion US Dollars throughout 2022

JAKARTA - Bank Indonesia (BI) noted that Indonesia's balance of payments (NPI) throughout 2022 has again posted a surplus of US$4 billion. This is after the previous year recorded a surplus of 13.5 billion US dollars.

Executive Director of the BI Communication Department, Erwin Haryono, said the development of the BOP as a whole in 2022 recorded a surplus driven by stronger export performance.

"So that it supports the resilience of the external sector", he said in a written statement, Monday, February 20.

If you look at the current account surplus in 2022, it has increased significantly to US$13.2 billion (1.0 per cent of GDP) compared to the 2021 surplus of US$3.5 billion (0.3 per cent of GDP).

"This performance was mainly supported by an increase in exports in line with high global commodity prices and demand for Indonesian commodities which remained good, amid imports which also increased in line with the improvement in the domestic economy", he said.

However, the capital and financial account in 2022 recorded a deficit of US$8.9 billion in line with high uncertainty in global financial markets. The position of foreign exchange reserves at the end of December 2022 remained strong, namely US$137.2 billion, equivalent to 5.9 months of imports and government foreign debt financing and was above international adequacy standards.

Meanwhile, when broken down in the fourth quarter of 2022, the balance of payments was a surplus of US$4.7 billion. This amount is inversely proportional to the third quarter of 2022, which had a deficit of US$1.3 billion.

Erwin Haryono said the BOP performance in the fourth quarter of 2022 was supported by a high current account surplus and an improvement in the capital and financial account deficit.

The current account balance again recorded a surplus of 4.3 billion US dollars or 1.3 per cent of GDP. Where continuing the achievement of a surplus in the previous quarter of 4.5 billion US dollars.

"The current account performance comes from a maintained surplus in the non-oil and gas trade balance, supported by export commodity prices that remain high", he said.

In addition, the deficit in the oil and gas trade balance decreased in line with the downward trend in world oil prices, amidst the tendency to increase fuel demand during the Christmas and New Year National Religious Holidays (HBKN).

The deficit in the services accounts improved, supported by an increase in the number of foreign tourist arrivals as a positive impact on the holding of various international events during the reporting period and year-end seasonal patterns.

"The current account surplus was also supported by an increase in the surplus in the secondary income account sourced from an increase in receipts from government grants", he added.

Meanwhile, the primary income account deficit increased, influenced by the payment of investment returns to foreign investors which increased in line with the business cycle and the trend of rising interest rates.

The performance of the capital and financial account improved mainly supported by an increase in direct investment. The capital and financial account recorded an improvement from a deficit of US$5.5 billion (1.6 per cent of GDP) in the third quarter of 2022 to a deficit of US$0.4 billion (0.1 per cent of GDP) in the fourth quarter of 2022.

This positive performance was mainly supported by direct investment which recorded an increase in surplus in line with investor optimism about the prospects for economic improvement and a maintained domestic investment climate.

The pressure on the net outflow of portfolio investment has also begun to ease in line with the inflows into the domestic Government Securities (SBN) market which have started since the middle of the fourth quarter of 2022.

In addition, other investment transactions experienced a decrease in the deficit partly due to the withdrawal of private placements amid increasing obligations to pay off foreign debt.