Indonesia's Balance Of Payments Surplus Reaches 7.9 Billion US Dollars In The Fourth Quarter Of 2024

Illustration (Photo: Doc. ANTARA)

JAKARTA - Bank Indonesia (BI) revealed that Indonesia's Payment Balance (NPI) in the fourth quarter of 2024 recorded a surplus of 7.9 billion US dollars, an increase compared to the third quarter of 2024 of 5.9 billion US dollars.

Executive Director of the BI Communication Department, Ramdan Denny Prakoso, said that the increase in the NPI surplus was supported by an increasing surplus of capital and financial transactions and a lower current account deficit.

"Transactions are running to record a decline in deficits in line with rising commodity prices in the midst of domestic economic activities that are maintained," he said in his statement, quoted on Friday, February 21.

Denny said that in the fourth quarter of 2024, transactions recorded a deficit of USD 1.1 billion or 0.3 percent of GDP, or lower than in the third quarter of 2024 with a deficit of USD 2.0 billion or 0.6 percent of GDP.

According to him, the improvement in transaction performance was mainly sourced from an increase in the trade balance surplus of goods, supported by non-oil and gas export growth in line with the increase in the prices of several main commodities for Indonesian exports.

On the other hand, Denny said that imports of goods continued to grow in line with the increasing needs of the community during the Christmas and New Year's National Religious Holidays (HBKN).

"The import activity of these goods increases the import of freight services, thus encouraging an increase in the balance of services deficit," he said.

In addition, Denny said that the primary revenue balance deficit was also recorded higher because the increase in payment of returns on direct investment and portfolio investment was in line with maintained domestic economic activity.

The capital and financial transactions recorded a surplus increase from 7.5 billion US dollars in the third quarter of 2024 to 8.5 billion US dollars in the fourth quarter of 2024.

According to him, this positive performance is supported by direct investment which continues to record a surplus in line with investor optimism about the economic outlook and the domestic investment climate that remains conducive.

Denny conveyed that other investment transactions also recorded a surplus driven by withdrawal of government and private loans.

Meanwhile, portfolio investment noted that capital flows came out in line with the uncertainty of the global financial market which was still high.

Overall in 2024, Denny conveyed that the development of the NPI shows strong external sector resilience, amid the uncertainty of the global financial market that is still continuing.

Denny conveyed that the overall 2024 NPI recorded a surplus of 7.2 billion US dollars, an increase from the previous year which recorded a surplus of 6.3 billion US dollars.

"The increase in surpluses is mainly driven by better performance of capital and financial transactions," he explained,

Furthermore, capital and financial transactions in 2024 recorded a surplus of 16.4 billion US dollars, an increase compared to a surplus of 9.9 billion US dollars in 2023, supported by foreign capital inflows in direct investments and portfolio investments, amid continued uncertainty in global financial markets.

Meanwhile, transactions running in 2024 recorded a deficit of US$8.9 billion or 0.6 percent of GDP, after recording a deficit of US$2.0 billion or 0.1 percent of GDP in 2023.

Denny said this development was influenced by a decrease in the balance surplus of goods trading in line with the weakening demand for major trading partner countries amid strong domestic demand.

Meanwhile, the position of foreign exchange reserves at the end of December 2024 rose to USD 155.7 billion from USD 146.4 billion at the end of December 2023.

"The position of foreign exchange reserves is equivalent to financing 6.5 months of imports and government foreign debt, and is above the international adequacy standard of about 3 months of imports," he said.

In the future, Denny said that 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 related authorities, in order to strengthen the resilience of the external sector.

Denny conveyed that the 2025 NPI is predicted to remain healthy, supported by a continuing capital and financial account surplus and a maintained account deficit in the deficit range of 0.5 percent to 1.3 percent of GDP.

"The capital and financial transaction surplus is supported by foreign capital inflows in line with investor positive perceptions of better domestic economic prospects and attractive investment returns," he said.