BI Ensures Payment Balance Is Maintained Even Though The Deficit Is 7.4 Billion US Dollars

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) stated that the performance of the Indonesia Payment Balance (NPI) in the second quarter of 2023 will be maintained amidst conditions of global uncertainty.

Head of the BI Communications Department Erwin Haryono said the current account deficit was recorded to be low amid conditions of decline in commodity prices and a slowdown in the global economy as well as increased domestic demand.

"The capital and financial transactions recorded a deficit that is still under control along with the impact of the high uncertainty of the global financial market," he said in a written statement, Tuesday, August 22.

According to Erwin, with these developments, NPI in the second quarter of 2023 recorded a deficit of 7.4 billion US dollars and the position of foreign exchange reserves at the end of June remained high at 137.5 billion US dollars.

"This amount is equivalent to financing 6 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 transactions were running to record a low deficit amid conditions of decline in commodity prices and a slowdown in the global economy and continued improvement in the domestic economy.

It was stated that in the second quarter of 2023 transactions recorded a deficit of 1.9 billion US dollars (0.5 percent of GDP), after posting a surplus of 3.0 billion US dollars (0.9 percent of GDP) in the previous quarter.

"The non-oil and gas trade balance surplus is still high, although it is lower than the previous quarter," he said.

Erwin added that this condition was influenced by declining non-oil and gas exports in line with the decline in commodity prices and the slowdown in the global economy, while imports decreased to a limited extent amid improving conditions for domestic economic activity.

"The oil and gas trade balance deficit has increased by the high consumption of fuel as a result of rising mobility and needs during the National Religious Holiday (HBKN) period," he added.

The deficit in the balance of services and the balance of primary income is also higher in line with the increase in the domestic economy and the pattern of dividend payments in the reporting period.

Erwin also revealed that the performance of capital and financial transactions remains under control, supported by direct investment in the midst of the uncertainty of the global financial market which is still high.

Direct investment is also recorded to remain solid so that it is still able to record a surplus as a reflection of the maintained positive perception of investors towards domestic economic prospects.

Meanwhile, portfolio and other investment investments recorded a deficit in line with the impact of the increase in global financial market uncertainty, as well as an increase in global bond payments and foreign loans due to quarterly patterns.

"With these developments, capital and financial transactions in the second quarter of 2023 recorded a deficit of 5.0 billion US dollars (1.4 percent of GDP), after previously recording a surplus of 3.7 billion US dollars (1.1 percent of GDP)," he explained.

Erwin ensured that the maintained performance of NPI in the second quarter of 2023 was able to continue to support Indonesia's external resilience.

"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 close policy synergies with the Government and relevant authorities to strengthen the resilience of the external sector," he concluded.