Indonesia' foreign exchange (forex) reserves stood at US$138.8 billion in February 2021, slightly increase from the previous month of $138.0 billion - Photo by Shutterstock

JAKARTA (TheInsiderStories) – Indonesia’ foreign exchange (forex) reserves dropped slightly from US$133.7 billion in October to $133.6 billion in November, the central bank reported today. The position is equivalent to financing 9.9 months of imports or 9.5 months of imports and servicing of government external debt, and is above the international adequacy standard of about three months of imports.

The policymakers assessed that the reserves are capable of supporting external sector resilience and maintaining macroeconomic and financial system stability. Bank Indonesia said, the reserves number was mainly influenced by the withdrawal of government foreign loans, tax revenues and oil and gas foreign exchange, as well as spending on government foreign debt payments.

In the central bank views the forex reserves will remain adequate, supported by stability and a maintained economic outlook, along with various policy responses to promote economic recovery. In annual meeting with financial industry players, BI governor, Perry Warjiyo, is optimistic that national economic recovery in 2021 can be realized by strengthening synergies through one prerequisite and five strategies.

One of these prerequisites is vaccination and the discipline of the COVID-19 protocol, and five policy response strategies like opening up productive and safe sectors, accelerating fiscal stimulus, increasing credit from the demand and supply side, monetary stimulus and macro-prudential policies, and digitalization of the economy and finance, particularly micro, small, and medium (MSMEs).

In 2021, the Indonesian economy is predicted to grow between 4.8 – 5.8 percent, supported by an increase in export performance, private and government consumption, as well as investment from both government capital expenditures and foreign investment as a positive response to the Job Creation Law. Growth in all regions will also increase, particularly in Java and the Sulawesi – Maluku – Papua region.

He also believed, macroeconomic stability is maintained with inflation that will be under control and the Indonesian Rupiah will move stable and have the potential to strengthen with balance of payments surplus supported by a low current account deficit of around 1.0 – 2.0 percent of gross domestic products (GDP). The growth in deposits and credit which will respectively increase to around 7 – 9 percent in 2021, he noted.

From the BI side, said Warjiyo, the Bank will support the national economic recovery through monetary policy stimulus that will be continued in 2021, like low interest rates, continuing the purchase of state bond in the primary market to finance the 2021 State Budget as a non-competitive bidder and macro-prudential policies which will also remain accommodative in 2021.

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