Indonesian finance minister predicts surplus in trade balance

Indonesian finance minister predicts surplus in trade balance

M. Chatib Basri. (ANTARA/Fanny Octavianus)

Imports have dropped."
Jakarta (ANTARA News) - Finance minister Chatib Basri has predicted a surplus in the trade balance in February 2014, due to improving export performance and declining imports of non-oil/gas commodities.

"There could be a surplus. It would not be too large, or would only range between US$400 million and US$500 million," he said here on Friday.

Chatib added that the improving performance in the trade balance was caused by the effect of a hike in the income tax (PPh 22) on imports of goods to reduce imports of consumer products and regulations related to the ease of imports for the export purposes (KITE) program.

"Imports have dropped. Some of the policies, such as PPh 22 and KITE, have had an impact. A deficit did occur in January, but it has risen marginally in February and (afterwards) the surplus will continue to increase," he said.

Deputy finance minister Bambang Brodjonegoro, meanwhile, said the relatively better performance of the balance of trade would be able to improve the current account deficit until the end of 2014.

However, he had called for caution, alerting the nation about a possible hike in the current account deficit in the second quarter in view of trends of dividends and debt payments that could affect the capital balance.

"Due to dividend payments as well as debt and other payments, the current account deficit could rise but it would later improve in the third and fourth quarters. What we have to safeguard is current account deficit in the second quarter as it is seasonal," he said.

The deputy for distribution and service statistics of the Central Bureau of Statistics, Sasmito Hadi Wibowo, said earlier that the impact of the ban of exports of coal and minerals had already been seen. In February there was a surplus in the trade balance.

"There was a reversal in the trend since October2013. January recorded a deficit because of the impact of the bank, but in February there had been a surplus and the potential surplus would continue in the next few months," he said.

Indonesias trade balance in January 2014 suffered a deficit of US$430 million, caused by a drop in the surplus in the non-oil/gas balance of trade and a hike in the deficit of the oil/gas balance of trade.

Bank Indonesia was of the view that the deficit in January 2014 was due to the seasonal pattern, so it had predicted the trade balance would again improve and in the next few months there would be a surplus.

The prospect of a surplus is based on predictions that demand from advanced countries would improve and increase the countrys exports of mineral mining products after an agreement was reached over the implementation of the law on minerals and coal and imports are controlled.

(Reporting by Satyagraha/UuH-YH/INE/KR-BSR/A014)

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