The central bank (Bank Indonesia/B.I.) expects to maintain a positive Balance of Payments (BOP) in the second quarter (Q2) of 2019, thus reinforcing external resilience. The capital and financial account surplus may potentially exceed the previous projection despite the seasonal increase anticipated in the current account deficit. The capital and financial account surplus is supported by maintained flows of foreign direct investment (FDI) and portfolio investment in line with the promising national economic outlook together with highly attractive domestic financial assets.
Positive Balance of Payments Maintained
Meanwhile, B.I. predicts a widening of the current account deficit due to slower export growth for goods and services along with the need to repatriate dividend payments as well as service the cyclical increase in external debt. At the end of May 2019, the position of reserve assets was recorded at US$120.3 billion, equivalent to 6.9 months of imports or 6.7 months of imports and servicing government external debt, which is well above the international standard of three months. B.I. projects a narrower current account deficit in 2019 compared with conditions in 2018, namely in the 2.5-3.0% of GDP range.