Bank Indonesia: Foreign Exchange Reserves Down To USD 2.4 Billion, Partly Due To Government's Debt Payments

JAKARTA - Bank Indonesia (BI) announced the position of foreign exchange reserves at the end of May 2021 at USD 136.4 billion. This figure decreased by about USD 2.4 billion from the closing of April 2021 which was USD 138.8 billion.

As an illustration, the position of foreign exchange reserves until last month was equivalent to financing 9.5 months of imports or 9.1 months of imports and payment of government foreign debt.

Head of BI Communications Department Erwin Haryono said Indonesia's foreign exchange reserves were still quite good when referring to the applicable regulations.

"This foreign exchange reserve is above the international adequacy standard of about 3 months of imports", he said in a press statement as quoted on Wednesday, June 9.

Erwin added that Bank Indonesia as the monetary authority in the country will continue to pay attention to the condition of these foreign payment instruments to ensure that domestic economic activities run smoothly.

"Bank Indonesia considers the foreign exchange reserves to be able to support external sector resilience and maintain macroeconomic and financial system stability", he said.

Meanwhile, the cut in foreign exchange reserves in May 2021 compared to April 2021 was caused by financial transactions of state officials.

"The decline in the position of foreign exchange reserves in May 2021 was influenced, among other things, by the payment of the government's foreign debt", he said.

For information, the government's foreign debt (ULN) position until the first quarter of 2021 reached USD 203.4 billion. Meanwhile, private external debt until the closing of March 2021 is USD 209.4 billion, which is bigger than the government's external debt.

In total, Indonesia's foreign debt is USD 415.6 billion as of the first quarter of 2021, or equivalent to 39.1 percent of Gross Domestic Product (GDP).

"Going forward, Bank Indonesia views foreign exchange reserves as adequate, supported by stability and maintained economic prospects, along with various policy responses to promote economic recovery", Erwin concluded.