Indonesia Balance of Payment Surplus Surges in Q3

Photo: Special

JAKARTA (TheInsiderStories) – Indonesia’s Balance of Payments (BOP) surplus surged in the third quarter of 2017 from previous quarter, supported by narrowing current account deficit and mounting capital and financial account surplus, Bank Indonesia data shows on Friday (Nov. 10)

The BOP surplus in the third quarter stood at US$5.4 billion, surged 671.4 per cent from surplus of US$0.7 billion in the previous quarter.

The surplus led to an increase in official reserve assets from US$123.1 billion at the end of second quarter to US$129.4 billion at the end of third quarter.

The amount of reserve assets was adequate to finance 8.6 months of imports and government external debt repayment and well above the international standards of reserve adequacy.

The current account deficit was US$4.3 billion (1.65% of GDP), narrowed from US$4.8 billion (1.91% of GDP) deficit in the previous quarter, driven by the increase in goods trade surplus and decrease in the primary income deficit.

The third quarter current account deficit was also lower than deficit in the same period last year, amounted to US$5.1 billion (2.09% GDP).

The increase in goods trade surplus was driven by rising exports, both in value and volume, surpassing imports that also increased along with growing domestic demand. Meanwhile, decrease in primary income deficit was mainly influenced by a seasonal pattern of lower dividend payments.

Meanwhile, the capital and financial account surplus increased significantly mainly supported by mounting influx of direct investment inflows in line with optimism on domestic economic performance.

The capital and financial account surplus in the third quarter amounted to US$10.4 billion, increased considerably from US$5.8 billion surplus in the previous quarter and also higher than US$9.9 billion surplus in the third quarter last year.

The increased surplus was driven by a surge in direct investment inflows, in line with soaring domestic investment, and dwindling other investment deficit, particularly on account of lesser outflows of domestic private deposits overseas.

Further increase in capital and financial account surplus was detained by a decrease in portfolio investment surplus mainly due to outflow of foreign funds from the domestic stock market, the central bank said.

Overall balance of payment development in the third quarter 2017 indicates a maintained external balance of the economy and paves the way for supporting a sustained macroeconomic stability.

Bank Indonesia will continue to wary of global developments, in particular risks related to the monetary and fiscal policies in the US and geopolitical pressures in some regions, which may effect the overall balance of payments performance.

Bank Indonesia believes that the balance of payments performance will be better supported by the monetary and macro-prudential policy mix, as well as strengthening policy coordination with the Government, especially in encouraging the continuation of structural reforms.

Written by Yosi Winosa, email: