JAKARTA (TheInsiderStories) – Indonesia’ Balance of Payment (BoP) recorded surplus US$2.1 billion in the third quarter (3Q) of 2020 supported by the current account and the capital and financial account surplus. In the previous quarter, the surplus worth of $9.2 million.
The reserve assets’ position at the end of September 2020 also increased to $135.2 billion, equivalent to 9.1 months of import and servicing government’ external debt, which is well above the international adequacy standard. The central bank said, the current account charted surplus, supported by an increase in the goods trade balance surplus.
In 3Q, the current account surplus stood at $1.0 billion (0.4 percent of GDP), after recording a deficit of $2.9 billion (1.2 percent of GDP) in the previous quarter. The gains were supported by a surplus in the goods trade balance in line with the improvement in export performance amidst subdued imports due to weak domestic demand.
The service account deficit expanded influenced by an increase in the deficit travel service due to the lack of inbound travelers visiting Indonesia and increase in the deficit of other services such as telecommunications, computer, and information services in line with the rise of services imports to support online activities which have been increased during the COVID-19 pandemic. While, the primary income account deficit widened, mainly driven by increasing yield payments on direct investment.
In the same quarter, the capital and financial account rose despite rebalancing capital flows due to elevated global financial markets uncertainty. The capital and financial account continued to up to $1,0 billion (0.4 percent of GDP) after experiencing a $10.6 billion surplus (4.3 percent of GDP) in the previous quarter.
This surplus stemmed from inflows of direct and other investment, despite experiencing a rebalancing of portfolio investment due to heightened global financial markets uncertainty. Other investment transactions experienced a surplus driven by withdrawal of loan commitment to support the financing of COVID-19 handling and the National Economic Recovery program, included the withdrawal of private sector deposits abroad in line with the need for foreign loan payments.
In addition, portfolio investment recorded net outflows totaling $1.9 billion, after recording net inflows of $9.8 billion in the preceding quarter. Looking forward, Bank Indonesia will carefully observe global economic dynamics that can affect Indonesia’ BoP outlook, continually strengthen the policy mix to maintain economic stability, and enhance policy coordination with the government and relevant authorities to bolster the external sector resilience.
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