The Balance of Payments Recorded a Deficit of US$ 1.3 Billion

Bank Indonesia

Indonesia’s balance of payments recorded a deficit of US$ 1.3 billion in the third quarter of 2022. This condition is inversely proportional to the previous quarter which recorded a surplus.

In the previous quarter, Indonesia’s balance of payments recorded a surplus of US$ 2.4 billion. Despite the deficit, external resilience is still strong. This was disclosed by the Executive Director of the Communication Department of Bank Indonesia (BI) Erwin Haryono.

“The current transaction in the third quarter of 2022 continues to show solid performance marked by an increase in surplus so that it can withstand pressure on the balance of payments due to pressure on the capital and financial account,” he said in an official statement, Friday (18/11/2022).

Meanwhile, the position of foreign exchange reserves at the end of September 2022 was recorded at US$130.8 billion, equivalent to financing 5.7 months of imports and government foreign debt, and was above international adequacy standards.

Erwin explained, the current account in the third quarter of 2022 recorded a surplus of US$4.4 billion or 1.3% of GDP. This surplus achievement was higher than the previous quarter’s achievement of US$4.0 billion or 1.2 percent of GDP.

The improved performance of the current account, said Erwin, stemmed from an increase in the surplus in the non-oil and gas trade balance, in line with strong demand for exports from trading partner countries and high global commodity prices.

This was also triggered by the reduced deficit in the oil and gas trade balance in line with the decline in world oil prices.

On the other hand, the capital and financial account recorded a deficit of US$6.1 billion or 1.8 percent of GDP, higher than the US$1.2 billion deficit in the second quarter of 2022.

Erwin said that the performance of the capital and financial transactions during this period was supported by direct investment amid increasing uncertainty in global financial markets.

“Foreign direct investment recorded a surplus which remained high in line with investor optimism about the prospects for economic improvement and a maintained domestic investment climate,” he explained.

Meanwhile, net portfolio investment outflows increased due to heightened uncertainty on global financial markets and the need to repay maturing private debt securities.

Erwin said that BI would continue to pay close attention to the dynamics of the global economy which could affect the prospects for the balance of payments.