Indonesia's Balance of Payments Surplus Falls by US$3 Billion in Q1 2019

Bank Indonesia (BI) announced a US$2.4 billion trade surplus for Indonesia in the first quarter of 2019. This figure is US$3 billion lower than the US$5.4 billion surplus recorded in the fourth quarter of 2018.

The decline in the trade surplus is attributed to a decrease in the surplus of capital and financial transactions (TMF). The TMF surplus in the first quarter of 2019 amounted to US$10.1 billion, or 3.72% of GDP, lower than the US$15.9 billion recorded in the fourth quarter of 2018. This is due to limited issuance of global bonds by corporations and payments on maturing government global bonds, resulting in lower net inflows of portfolio investment. Furthermore, BI also mentioned that the lower TMF compared to the previous quarter was caused by increased private sector placements in foreign banks. As a result, other investments experienced net outflows.

On the other hand, foreign exchange reserves increased from US$120.7 billion in the fourth quarter of 2018 to US$124.5 billion in the first quarter of 2019. BI assessed that this amount is sufficient to finance import payments and government foreign debt for 6.8 months, exceeding the international adequacy standard of 3 months of import cover.