JAKARTA - Bank Indonesia (BI) revealed that Indonesia's International Investment Position (PII) in the fourth quarter of 2024 recorded a net obligation of US$ 245.3 billion, lower than net obligations at the end of the third quarter of 2024 of US$ 270.4 billion.
Executive Director of the BI Communication Department Ramdan Denny Prakoso explained that the decrease in net obligations was influenced by the increase in the position of Foreign Financial Assets (AFLN) and the decline in the position of Foreign Financial Obligation (KFLN).
Denny conveyed that Indonesia's AFLN position at the end of the fourth quarter of 2024 was recorded at 522.8 billion US dollars, up 0.6 percent (qtq) from 519.7 billion US dollars at the end of the third quarter of 2024.
"The increase in AFLN's position is influenced by the increase in asset placement, especially in foreign exchange reserves, followed by direct investment and portfolio investment," he explained in his statement, Monday, March 10.
According to him, the increase in AFLN's position was further restrained by other change factors in line with the strengthening of the US dollar exchange rate against the majority of the world's currencies and the weakening of the global stock price index.
In addition, Denny conveyed that the position of KFLN Indonesia at the end of the fourth quarter of 2024 fell 2.8 percent (qtq) to 768.1 billion US dollars from 790.0 billion US dollars at the end of the third quarter of 2024.
Denny explained that the decline in KFLN's position was influenced by portfolio investment transactions that recorded capital flows out in line with the uncertainty of the global financial market which was still high.
Meanwhile, direct investment and other investments continue to record incoming capital flows reflecting investor optimism for the economic outlook and the domestic investment climate.
He conveyed that the development of KFLN's further position was also influenced by the decline in the value of domestic financial instruments in line with the strengthening of the US dollar exchange rate against the majority of global currencies, including the Rupiah, and the decline in domestic stock prices.
Overall in 2024, PII Indonesia also recorded a decrease in net obligations compared to the position at the end of 2023.
Meanwhile, Indonesia's net PII obligation fell from USD 257.9 billion at the end of 2023 to USD 245.3 billion at the end of 2024.
Denny said the decline in PII's net obligation came from an increase in AFLN's position of US$37.5 billion (7.7 percent yoy) which was higher than the increase in KFLN's position of US$24.9 billion (3.4 percent yoy).
According to him, the increase in AFLN's position was driven by an increase in position in all components, both direct investment, portfolio investment, other investments, and foreign exchange reserves positions.
Meanwhile, Denny said that the increase in KFLN's position was mainly influenced by foreign capital inflows in the form of direct investment, portfolio investment, and other investments.
Denny said that Bank Indonesia views that Indonesia's PII development in the fourth quarter of 2024 and overall in 2024 will be maintained, thus supporting external resilience, this is reflected in the improvement in the ratio of Indonesia's PII's net obligations to GDP from 18.8 percent in 2023 to 17.6 percent in 2024.
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In addition, he conveyed that the structure of Indonesia's PII obligations was also dominated by long-term instruments (92.3 percent), especially in the form of direct investment.
In the future, Denny said that Bank Indonesia will always pay close attention to the dynamics of the global economy that can affect Indonesia's PII prospects and continue to strengthen the policy mix response, which is supported by close policy synergies with the Government and relevant authorities to strengthen the resilience of the external sector.
"Bank Indonesia will continue to monitor potential risks related to the development of PII's net obligations towards the Indonesian economy," ujanrya said.
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