JAKARTA – Bank Indonesia (BI) reported that the performance of Indonesia's Balance of Payments (BOP) in the fourth quarter of 2021 remained good, thus supporting external resilience.
Head of the BI Communications Department Erwin Haryono said this was reflected in the record low balance of payments deficit of US$ 0.8 billion, supported by a continuing current account surplus, in the midst of a deficit in the capital and financial account.
"With these developments, the overall BOP in 2021 recorded a fairly high surplus of 13.5 billion US dollars," he said in an official broadcast today, Friday, February 18.
According to Erwin, this condition was also supported by foreign exchange reserves at the end of December 2021, which increased to US$144.9 billion, equivalent to 7.8 months of imports and government foreign debt, which was above international adequacy standards.
Then, the current account surplus continued to be US$1.4 billion (0.4 percent of GDP) at the end of last year.
Then, the capital and financial transactions in the fourth quarter of 2021 were in good condition, supported by a surplus of direct investment in the midst of continued global financial uncertainty. Investor optimism about the prospect of domestic economic recovery pushed net direct investment inflows at the end of 2021 to US$3.4 billion.
“On the other hand, the continued uncertainty in global financial markets has led to adjustments in capital outflows for portfolio investment, especially in the form of domestic Government Securities (SBN) amidst stock performances that still recorded a surplus. In addition, other investment transactions recorded a deficit due to an increase in payment of maturing private foreign debts," Erwin explained.
Due to these developments, the capital and financial account in the fourth quarter of 2021 recorded a deficit of 2.4 billion US dollars (0.7 percent of GDP).
In general, the BOP for the whole of 2021 recorded a high surplus, so that external sector resilience was maintained. The balance of payments surplus in 2021 was recorded at 13.5 billion US dollars, a far increase compared to the surplus in the previous year of 2.6 billion US dollars.
The surplus was mainly driven by rapid export performance in line with increasing demand from trading partner countries and high global commodity prices, amid rising imports as the domestic economy improved.
In addition, the capital and financial account in 2021 also posted a surplus of 11.7 billion US dollars, higher than the previous year's 7.9 billion US dollars, mainly supported by direct investment and portfolio investment.
"Going forward, Bank Indonesia will continue to monitor the dynamics of the global economy that may affect the outlook for the balance of payments and continue to strengthen the policy mix to maintain economic stability, as well as continue policy coordination with the Government and relevant authorities to strengthen external sector resilience," Erwin concluded.
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