The country`s balance of payments improved in the second quarter of 2014, despite an increase in current account deficit.Jakarta (ANTARA News) - Bank Indonesia (central bank) said the countrys current account deficit is estimated to reach US$27 billion in 2014, lower than around US$30 billion in 2013.
"The deficit is expected to decline in the following quarters, with an increase in exports of manufactured products, resumption of exports of minerals and declining trend of imports of commodities other than oil and gas," Bank Indonesia Governor Agus Martowardojo said here on Thursday.
The countrys balance of payments improved in the second quarter of 2014, despite an increase in current account deficit, Agus said.
A surplus was recorded in the balance of payments in the second quarter of this year strengthened with improved performance in capital and financial account.
In the second quarter of 2014, the current account deficit was US$9.1 billion or 4.27 percent of the countrys GDP, down from US$10.1 billion (4.47 percent of GDP) a year earlier as a result of the stabilization policy adopted by Bank Indonesia and the government, though up from USD4.2 billion (2.05 percent of GDP) in the first quarter.
"The increase in the surplus in trade of commodities other than oil and gas is not enough to offset the increase in the deficit in oil and gas trade balance," he said.
He said exports of coal, crude palm oil and minerals fell sharply with the economic slowdown of emerging countries and the law on coal and minerals that bans exports of mineral ores.
Exports of manufactured goods like automotive products, textiles and finished wear have increased with the economic growth recorded by advanced nations.
Meanwhile, payment of foreign debt interest and repatriation of dividend that increased in the second quarter of 2014, contributed to widening the current account deficit.
Surplus in the capital and financial account increased significantly in the second quarter on stronger inflows of foreign portfolio investment and direct investment.
"As a result the countrys foreign exchange reserve rose to US$110.5 billion enough to pay imports for 6.2 months and repay the government foreign debts. It is well above the international adequacy standard of around 3 month imports," he said.
He predicted that the current account deficit would continue to decline in the following quarters with expected improvement in export performance.(*)
Editor: Heru Purwanto
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