JAKARTA - The government through the Ministry of Finance (Kemenkeu) revealed that the balance of services and primary income from direct investment income transfers and portfolios recorded a lower deficit.
Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Kacaribu said the surplus of capital and financial transactions was recorded at 3.4 billion US dollars in the first quarter of 2023.
"This amount is equivalent to 1 percent of Indonesia's gross domestic product (GDP)," he said in a press release today, Wednesday, May 24.
According to Febrio, the slick score that was collected by the Republic of Indonesia shot up when compared to the fourth quarter of 2022 which was only US$300 million.
"The increasing flow of direct investment inflows and the return of portfolio investments to Indonesia is supported by positive sentiment from foreign investors over the strengthening of Indonesia's fundamentals and economic prospects," he said.
In detail, Sri Mulyani's subordinate explained that in the first quarter, the net investment in Indonesia was recorded at 3.4 billion US dollars. Meanwhile, net portfolio investment was recorded at 3.0 billion US dollars, supported by capital flows entering the government bond market worth 4.5 billion US dollars.
Direct investments will mainly flow into the manufacturing sector, the electricity, water and gas sectors, as well as the transportation, warehousing, and communication sectors. Meanwhile, the significant flow of portfolio investment after experiencing outflows in the previous quarter was mainly sourced from increasing Government Securities (SBN)," he said.
Furthermore, the swift flow of foreign capital has caused appreciation of the rupiah exchange rate and the decrease in the obligation of Indonesian government bonds amid rising interest rates in many other developing countries.
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He said the difference between the Indonesian bond yield and the 10-year tenor United States bond (US treasury) also decreased to the level of 270 basis points (bps), or almost half compared to early 2022, so the cost of funds became cheaper.
"The flow surplus of capital entering the country supports the establishment of foreign exchange reserves," he said.
Meanwhile, at the end of March 2023 the position of foreign exchange reserves was maintained, which was USD 145.1 billion. This level is equivalent to 6.2 months of imports and government foreign debt (ULN) payments and is still above the international adequacy standard of three months of imports.
"This foreign exchange reserves will continue to be maintained as one of the capital to maintain Indonesia's resilience to various external risks in the future," closed Febrio.
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