BI Predicts Indonesia's Balance Deficit Is Lower Than The IMF's Projection

Governor of Bank Indonesia (BI) Perry Warjiyo. (Photo: Doc. ANTARA)

JAKARTA - Bank Indonesia (BI) projects that the current account deficit (CAD) in the Indonesia Payment Balance (NPI) in 2025 will be in the range of 0.5 percent to 1.3 percent of Gross Domestic Product (GDP).

This projection is lower than the International Monetary Fund (IMF) estimate which predicts Indonesia's current account deficit will reach 1.5 percent of GDP in the same year.

BI Governor Perry Warjiyo explained that this lower deficit projection has been calculated by considering a number of factors, including the dynamics of the resipprocal tariff policy implemented by the United States (US) Government towards various countries, including China.

He acknowledged that the tariff policy also affected Indonesia's export volume to the US, and had an indirect impact on Indonesia's exports to China.

"The dynamics of this tariff policy continue and of course further assessment needs to be carried out. But there are three things that underlie our belief, our optimism for Indonesia's external economic stability is quite strong in facing this global turmoil," he said.

Perry conveyed, the first thing is that the projected account deficit runs in the range of 0.5 percent to 1.3 percent of the GDP has been compiled according to BI calculations and international standards that apply to developing countries.

As long as the deficit remains below three percent, Indonesia is still considered to have solid external stability.

Second, BI is optimistic that the current account deficit can be financed by a surplus in capital and financial transactions.

This is supported by the flow of funds from portfolio investments, foreign investment, as well as government policies regarding Export Result Foreign Exchange (DHE) from natural resources.

Third, Indonesia's external economic stability is quite strong, supported by the position of high foreign exchange reserves.

"So, we believe that the current account deficit can be fulfilled from the surplus of capital and financial transactions so that the overall balance of payments will be in surplus," said Perry.

Meanwhile, Indonesia's foreign exchange reserves until the end of March 2025 were recorded at 157.1 billion US dollars, equivalent to import financing for 6.7 months or 6.5 months of imports plus government foreign debt payments.

This amount is above the international adequacy standard which is only equivalent to 3 months of imports.

"The three considerations that concluded our optimism for Indonesia's external economic resilience in the face of strong global turmoil," explained Perry.