BI expects to book Rp 4 trillion surplus in 2000

JAKARTA (JP): Bank Indonesia expects to book a surplus of some Rp 4 trillion (US$465.12 million) in the 2000 financial year if the current exchange rate and interest rate levels persist throughout the year, according to a senior official at the central bank.

Bank Indonesia director for internal finances Bumbunan Hutapea said on Wednesday a weakening of the rupiah would benefit the central bank because it would be able to sell dollars at a higher rate.

"We forecast BI will have a surplus of Rp 4 trillion by the end of 2000," Hutapea said during a media conference.

He said the surplus would be greater if the rupiah further weakened, while a strengthening of the rupiah would result in a smaller surplus.

The central bank booked a deficit of Rp 5.4 trillion in the May to December period of 1999. Bank Indonesia became an independent central bank on May 17.

Bumbunan said the 1999 deficit was largely the result of the strengthening of the rupiah to approximately Rp 7,000 to the U.S. dollar from about Rp 10,000 in 1998.

The rupiah closed lower at Rp 8,648 to the dollar on Wednesday from Rp 8,600 on Tuesday.

The central bank occasionally sells dollars to help strengthen and stabilize the local currency. It also can allow the interest rate of its Bank Indonesia SBI promissory note to increase to strengthen the rupiah.

But Bumbunan said if the interest rate increased it would cost the central bank, thus potentially eroding its surplus.

Bank Indonesia has raised the short-term SBI interest rate by more than 44 basis points since early May to help defend the rupiah.

The interest rate on the one-month SBI notes rose to 11.74 percent on Wednesday from 11.32 percent the previous week.

Bank Indonesia officials have said the interest rate will not breach the 12 percent level if the domestic political situation improves, particularly following the August session of the People's Consultative Assembly, during which President Abdurrahman Wahid will deliver an accountability speech.

Bumbunan said the cost of the central bank's monetary actions had become greater recently, largely due to the continuing domestic social and political problems which are the primary factor behind the weakening of the currency.

He said the cost to the central bank for the repayment of the interest rate on its SBI notes had reached Rp 1 trillion per month.

Bank Indonesia released this week its 1999 financial statement, which had been designated a "qualified opinion" by the Supreme Audit Agency (BPK).

BPK earlier issued a "disclaimer" for the financial statement. The agency later changed this to a qualified opinion following a second audit.

According to Bank Indonesia's 1999 financial statement, the central bank has total assets of 476.3 trillion, total liabilities of Rp 392.9 trillion and total equities of Rp 83.4 trillion.

Revenue totaled Rp 12.6 trillion, while spending reached Rp 18 trillion, resulting in a deficit of Rp 5.4 trillion.(rei)