Government optimistic in balance of payments
JAKARTA (JP): The government remains optimistic that the country will enjoy a surplus of US$1.1 billion in its balance of payments next fiscal year despite investors' vanishing confidence in the economy.
Speaking before a House of Representatives' plenary session, Minister of Finance Mar'ie Muhammad predicted that the balance of payments surplus would come from improving non-oil exports rather than from capital inflows.
Unlike in the previous estimate, Mar'ie projected that the country would record for the first time in more than a decade a surplus of $2.63 billion in its current account for 1998/1999.
He said, however, the country would suffer a capital account deficit of $1.53 billion for the next fiscal year as a result of capital repatriation by foreign investors who had lost confidence in the country's economic prospects.
"With that development, our balance of payments for 1998/1999 will book a surplus of $1.09 billion, instead of $1.07 billion as previously predicted, making our foreign exchange reserves expand to $18.26 billion by March 1999, enough for five months of imports," Mar'ie said.
On Jan. 6, when the government presented the initial 1998/1999 draft budget, which was revised yesterday, the government predicted Indonesia would record a surplus of $6.47 billion in capital account and a deficit of $5.39 billion in current account for the next fiscal year.
Mar'ie said yesterday that the government had revised its estimate on capital account from surplus to deficit because it expected that private foreign debt servicing would increase drastically next fiscal year.
Meanwhile, the government was optimistic that non-oil exports would expand to US$59.59 billion from the previous estimate of $59.48 billion due to the increasing competitiveness of Indonesian products.
"The rupiah's depreciation against the currencies of our trading partners, especially U.S. dollar, has made our export products, especially resource-based products, cheaper in the international market," Mar'ie said.
"On the other side, the prices of imported products will soar, which will reduce Indonesia's imports to $42.43 billion from the previous estimate of $48.07 billion," he added.
Deficits in services were set to decline to $15.53 billion from the previous estimate of $16.81 billion.
Therefore, the country's current account, which was initially estimated to suffer a deficit of $5.39 billion, was set to enjoy a surplus of $2.63 billion, Mar'ie said. (rid)
Table: Indonesia's revised balance of payments (US$ million)
1996-97 1997-98 1998-99
Description (actual) (estimate) (projection)
---------------------------------------------------------------
1. Exports (FOB) 52,038 55,981 60,589
a. Oil 7,513 6,387 5,348
b. Liquefied natural gas 5,258 4,632 4,884
c. Non-oil and non-gas 39,267 44,962 50.357
2. Imports (FOB) -45,819 -45,341 -42,431
a. Oil -4,423 -3,533 -3,067
b. Liquefied natural gas -270 -271 -318
c. Non-oil and non-gas -41,126 -41,537 -39,046
3. Services -14,288 -14,922 -15,531
a. Oil -1,831 -2,087 -2,233
b. Liquefied natural gas -1,710 -2,316 -2,168
c. Non-oil and non-gas -10,747 -10,519 -11,130
4. Current account -8,069 -4,282 2,627
a. Oil 1,259 767 48
b. Liquefied natural gas 3,278 2,045 2,398
c. Non-oil and non-gas -12,606 -7,094 181
5. Special drawing rights 0 0 0
6. Official capital 5,298 11,247 9,051
a. Program aid 0 6,722 4,300
b. Project aid and others 5,298 4,525 4,751
7. Debt repayments (principal) -6,118 -4,884 -4,975
8. Other capital 13,488 -10,355 -5,607
9. Total (4 to 8) 4,599 8,274 1,096 10. Errors and omissions - 701 -1,172 0 11. Monetary movements -3,898 9,446 -1.096
Note:
Current account against GDP (%) -3.5 -2.2 1.8
Debt Service Ratio (%)
- Government 14.6 11.8 10.7
- National 34.2 39.2 34.2
Source: The Ministry of Finance