BI books Rp 35.5t revenue from forex management
JAKARTA (JP): Bank Indonesia booked some Rp 35.55 trillion in revenue from its foreign exchange management operation last year including gains from intervention in the currency market to help stabilize the ailing rupiah, according to the Supreme Audit Agency (BPK) in its audit report on the central bank 2000 financial report.
BPK said that Rp 20.66 trillion of the forex revenue was a result of exchange rate differential following the adoption of the net currency position (NCP), a forex management method, since early January.
"On December 31, 2000, Bank Indonesia has net assets in foreign currency worth Rp 20.66 trillion equal to US$23.53 million," BPK said in the audit report, a copy of which was obtained by The Jakarta Post over the weekend.
Bank Indonesia holds a basket of hard currencies including the U.S. dollar, Japanese yen, Germany's deutsche mark, and the euro. Forex transaction is reported in rupiah using the current exchange rate level of the transaction date.
The central bank claimed that it has sold its dollars periodically to help prop up the rupiah, which has been under strong pressure due to a combination of domestic political instability and economic woes. Bank Indonesia has never disclosed the amount of its market intervention measure. It is surprising that the central bank managed to make a profit from the intervention measure. Many had thought that it was a losing operation as the central bank had to sell its dollars at lower rates in order to defend the rupiah.
The exchange rate of the rupiah against the dollar in 2000 averaged at Rp 8,400 per dollar compared to the central bank's average assumption of Rp 7,000 per dollar when it made its inflation forecast earlier in the year.
The local currency started to tumble in April particularly in the run up to the annual session of the People's Consultative Assembly, the country's top legislative body, and strong dollar demand for foreign debt repayment and amid the general weakening of other currencies against the dollar.
The rupiah is currently hovering at around Rp 11,450 per dollar amid the country's leadership crisis as the embattled President Abdurrahman Wahid faces growing pressure from the legislative body to step down.
The gains from the forex management operation is the largest contributor to Bank Indonesia's 2000 revenue of around Rp 49.66 trillion versus total spending of around Rp 22.46 trillion.
BPK said that Bank Indonesia booked a surplus of around Rp 2.57 trillion during the year after taking into account the Rp 24.5 trillion cost resulting from mismanagement in the disbursement of emergency loans to ailing banks.
The central bank on behalf of the government channeled around Rp 144.5 trillion in emergency loans into troubled banks between 1998 and 1999 to bailout the industry.
The government was supposed to cover the cost, but after BPK revealed that much of the emergency loans were misused by the recipient banks, which were mostly owned by the cronies of former dictator Soeharto, the government initially declined to do so. Following intense negotiations, the government finally agreed late last year to cover around Rp 120 trillion of the cost, with the remaining Rp 24.5 trillion to be shouldered by Bank Indonesia.
But the burden sharing deal reached in November between the government and the independent Bank Indonesia has yet to be approved by the House of Representatives.
BPK gave a qualified opinion on the Bank Indonesia financial report.
"The report ... is already in line with generally accepted accounting principles ...," the agency said.
But BPK added that the burden sharing deal must be approved by the House to lend legal certainty to the arrangement.
Meanwhile, on spending costs, the largest outlay of around Rp 11.91 trillion went to the implementation of the central bank's monetary policy.
Bank Indonesia covers the interest rate of the central bank SBI promissory notes issued to absorb excess liquidity in a bid to curb inflationary pressure and also help defend the rupiah.
The interest rate of the SBI notes in 2000 was less volatile compared to the level over the past few months of this year.
Elsewhere, the Bank Indonesia 2000 financial report said that the central bank booked total assets of some Rp 580.32 trillion as against a total liability of Rp 461.12 trillion.
The largest asset was in the form of claims on the government totaling Rp 279.60 trillion, followed by rupiah and foreign currency notes worth Rp 218.06 trillion.
The central bank's largest liability was rupiah and foreign currency obligations to international institutions including foreign banks and the International Monetary Fund totaling Rp 105.13 trillion. (rei)