Indonesia’s Balance of Payments (BOP) in Q4/2019 Surplus, External Resilience Maintained - Bank Sentral Republik Indonesia
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July 15, 2020

No. 22/10/DKom

Indonesia’s Balance of Payments (BOP) in the Q4/2019 recorded surplus thereby reinforcing external resilience. The BOP surplus stood at USD4.3 billion in the Q4/2019, improving from the deficit of USD46 million recorded in the previous quarter. The performance of BOP was supported by an improvement in the capital and financial account surplus combined with a remained manageable current account deficit. Consequently, the position of reserve assets at the end of December 2019 reached USD129.2 billion, up from USD124.3 billion at the end of September 2019, equivalent to 7.6 months of imports or 7.3 months of imports and servicing government external debt, which is well above the international adequacy standard of three months of imports.

The capital and financial account surplus was observed to increase in the Q4/2019, reflected investor optimism of the domestic economic outlook. The capital and financial account surplus reached USD12.4 billion in the Q4/2019, higher than USD7.4 billion in the previous quarter. A significant surplus was due to an influx of portfolio investment largely on government and corporate issuances of global bonds. In addition, other investments account also recorded surplus on the back of offshore deposits withdrawals from domestic businesses as well as increase of nonresident placements in the domestic banks. Such dynamics corroborate the positive perception held by investors concerning the national economy prospects coupled with attractive domestic financial assets.

The current account deficit has been maintained in the Q4/2019, thus bolstering external sector resilience for Indonesia. The current account deficit posted USD8.1 billion (2.84% of GDP) in the Q4/2019 supported by a larger non-oil and gas trade surplus as non-oil and gas imports shrank amidst restrained non-oil and gas exports. On the other hand, oil and gas trade deficit expanded in line with a larger oil imports to fulfill higher demand due to seasonal spike at the end of the year.

The BOP developments in 2019 reflected solid external sector resilience. BOP in 2019 registered a surplus of USD4.7 billion, improved from a deficit of USD7.1 billion in 2018. This improvement was driven by decreasing current account deficit and soaring capital and financial account surplus. The current account deficit narrowed to USD30.4 billion or 2.72 % of GDP from deficit of 2.94% of GDP in the last year. Such developments was primarily stemmed from goods trade surplus, in contrast to the deficit posted in the previous year. The goods trade surplus was attributed to the increase in non-oil and gas trade surplus combined with the decline in oil and gas trade deficit as an impact of policies to control import, including B20 program which has reduced oil imports. In addition, despite uncertainty blighting the global financial markets, the capital and financial account recorded a significant USD36.3 billion surplus, up from USD25.2 billion surplus in the 2018, driven by a deluge of long-term capital inflows.

Looking forward, Indonesia’s BOP is expected to remain solid, thus bolstering external sector resilience. The BOP outlook is supported by a manageable current account deficit in 2020 within 2.5-3.0% of GDP and a maintained influx of foreign capital riding on positive investor perception in the domestic economic outlook. Bank Indonesia will continue to strengthen policy mix in order to maintain macroeconomic and financial system stability, and strenghthen policy synergy with the Government and other relevant authorities to improve external sector resilience, including efforts to attract more Foreign Direct Investment (FDI).

Further information and data are presented in the Q4/2019 Indonesia’s Balance of Payments Report on the Bank Indonesia website.

Jakarta, 10th February 2020


Onny Widjanarko
Executive Director



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