Current account surplus set to drop to $1.3 billion
JAKARTA (JP): Indonesia is projected to post a lower current account surplus of US$1.3 billion in the 1999/2000 fiscal year compared to the $4.5 billion estimated for the current fiscal year ending in March 1999.
The lower current account surplus will be caused by an increasing deficit in services due to rising imports, according to a government document detailing the 1999/2000 state budget draft.
The deficit in services is projected to reach $17.1 billion for the fiscal year ending in March 2000 which creates the lower current account surplus projected to equal 0.9 percent of gross domestic product (GDP) compared to 4.2 percent of GDP for the current 1998/1999 fiscal year.
The country's total imports are projected to increase by about 9 percent to $33.9 billion in the next fiscal year from $30.9 billion this fiscal year.
These growing imports will be attributed to an improving investment climate particularly due to the greater stability of the rupiah and the political situation, lower interest rates, and increasing foreign confidence in accepting the country's letters of credit.
Although non-oil and gas exports are seen to rise by 4.8 percent to $45.7 billion, oil and gas exports are projected to drop by 7 percent to $6.6 billion due to lower prices.
The projected oil price in the new budget is set at $10.50 dollars per barrel against $13 per barrel now. Indonesia's oil production is expected to remain unchanged at 1.52 million barrels per day.
The country's oil and gas net exports are projected to reach $3.8 billion as oil and gas imports are expected to be $2.8 billion, the same level as in last fiscal year's budget.
In addition to an improving political situation and lower interest rates, exports will be higher due to the exchange rate of the rupiah against the U.S. dollar which will still provide a competitive edge for Indonesian export products.
The rupiah is projected at Rp 7,500 per dollar in the 1999/2000 state budget, compared to Rp 15,000 in May, 1998. The projected rupiah rate against the U.S. dollar is Rp 10,600 in the current budget.
Official capital inflow is estimated to reach $11.2 billion consisting of $7.2 billion in program aid and $4.0 billion in project aid.
With government debt repayment (principal) projected to reach $4.3 billion, the net official capital inflow is seen at $6.9 billion.
Other forms of capital inflow are projected to form a deficit of $4.9 billion.
But with a larger official capital inflow, Indonesia is projected to enjoy a surplus of $2 billion in capital inflow.
With the surpluses in the capital inflow and current account, the country's overall balance of payments for the 1999/2000 fiscal year is projected to be in surplus to the tune of $3.3 billion. (rei)
Table: Indonesia's balance of payments 1997/1998-1999/2000 (in billions of US dollars)
Description 1997-1998 1998-1999 1999-2000
(actual) (estimate) (projection) ------------------------------------------------------------------
1. Exports, fob 56.1 50.7 52.3
a. Oil and non LNG* 10.2 7.1 6.6
b. Non oil and non LNG 45.9 43.6 45.7
2. Imports, fob -42.7 -30.9 -33.9
a. Oil and LNG -4.1 -2.8 -2.8
b. Non oil and non LNG -38.6 -28.1 -31.1
3. Services -15.1 -15.3 -17.1
a. Oil and non LNG -4.6 -2.8 -2.9
b. Non oil and non LNG -10.5 -12.5 -14.2
4. Current Account -1.7 4.5 1.3
a. Oil and non LNG 1.5 1.5 0.9
b. Non oil and non LNG -3.2 3.0 0.4
5. Special Drawing Rights 0.0 0.0 0.0
6. Official Capital 8.3 18.3 11.2
a. Program aid and others 3.0 12.2 7.2
b. Project aid and others 5.3 6.1 4.0
7. Debt Repayments (principal) -4.1 -3.1 -4.3
8. Other Capital -11.8 -10.8 -4.9
9. Total (4 through 8) -9.3 8.9 3.3
10. Errors and Omissions -0.7 1.0 0.0
11. Monetary Movements 10.0 -9.9 -3.3
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Current Account/GDP -1.2 4.2 0.9
DSR National 50.7 51.6 42.9
*LNG = liquefied natural gas