Bank Indonesia: Improved Balance Surplus Payment Strengthens External Resilience

Illustration of Bank Indonesia (Photo: Antara)

JAKARTA - Bank Indonesia (BI) reported that the Indonesia Payment Balance (NPI) in the first quarter of 2023 posted a surplus of 6.5 billion US dollars.

Head of the BI Communications Department Erwin Haryono said the score increased compared to the fourth quarter of 2022 which amounted to USD 4.7 billion.

"NPI's performance is supported by the continued surplus of transactions being carried out and accompanied by a surplus of capital and financial transactions," he said in a written statement on Tuesday, May 23.

According to Erwin, for this development, the position of foreign exchange reserves at the end of March 2023 increased from the previous 137.2 billion US dollars at the end of December 2022 to 145.2 billion US dollars.

"This is equivalent to financing 6.2 months of imports and payment of government foreign debt, and is above the international adequacy standard of around 3 months of imports," he said.

Erwin explained that the transaction was running again, recording a surplus supported by a high trade balance surplus of goods. He said, in the first quarter of 2023, transactions went on to record a surplus of US$3.0 billion (0.9 percent of gross domestic product/GDP), continuing the surplus achievement in the fourth quarter of 2022 amounting to US$4.2 billion (1.3 percent of GDP).

He explained that the trade balance surplus of goods remained high, supported by demand from major trading partners who remained good at non-oil and gas export commodities and decreased oil and gas deficits in line with the decline in world oil prices.

Meanwhile, the service balance deficit has decreased, supported by the performance of travel services (travel) which continues to strengthen along with increased mobility and positive impacts from China's economic opening, thus encouraging an increase in foreign tourist visits.

"In addition, the primary income balance deficit is also decreasing due to lower investment returns payments," he said.

Furthermore, capital and financial transactions recorded a surplus mainly supported by an increase in portfolio investment performance. Capital and financial transactions in the first quarter of 2023 recorded a surplus of USD 3.4 billion (1.0 percent of GDP), a significant increase compared to a surplus of USD 0.3 billion (0.1 percent of GDP) in the fourth quarter of 2022.

This development was contributed by the increase in the performance of portfolio investments, particularly in the form of inflows on domestic Government Securities (SBN), along with the uncertainty of the global financial markets that have eased and the yields of attractive financial assets.

Direct investment also remains solid, by posting an increase in surplus in line with investor's positive perception of domestic economic prospects that are maintained," he added.

On the other hand, other investment transactions have increased deficits, among others, due to increased private investment and foreign debt payment needs.

"Bank Indonesia assesses the increasing performance of NPI in the first quarter of 2023, continuing to support external resilience," he said.

"In the future, Bank Indonesia will always pay close attention to the dynamics of the global economy that can affect the prospects for NPI and continue to strengthen the response of policy mixes supported by policy synergies with the government and relevant authorities to strengthen the resilience of the external sector," Erwin concluded.