Indonesia suffers $200m BoP deficit in fiscal first half

JAKARTA (JP): Indonesia suffered a deficit of more than US$200 million in its balance of payments (BoP) in the first six months of the 1996/1997 fiscal year, beginning April.

Minister of Finance Mar'ie Muhammad reported to the House of Representatives' Budgetary Commission yesterday that Indonesia recorded a $4.52 billion current account deficit for the April- September period.

Indonesia had a $4.3 billion surplus in its capital account for the same period and, therefore, a $220 million balance of payments deficit.

Mar'ie said the current account deficit was attributed to a US$6.65 billion services deficit, with a $2.55 billion deficit in freight services and $1.39 billion deficit in government debt services.

The country's merchandise trade surplus dropped to $2.13 billion, down from $2.24 billion for the same period last year. The trade surplus was, of course, far short of the $6.65 billion deficit in services.

"Thus, our current account deficit expanded because our surplus in trade could not balance the deficits in services," Mar'ie said.

The government has tried to reduce the current account deficit with programs to boost non-oil exports and empower local service industries, Mar'ie said.

He said the government's export strategy team had identified Indonesia's 22 largest export destination countries, which absorb about 90 percent its exports.

Indonesia suffered a non-oil trade deficit of $8.67 billion last year with 11 of the 22 countries.

The 11 countries are Australia, Canada, France, Germany, India, Italy, Japan, South Korea, Taiwan, Thailand and the United States.

Mar'ie said the team was formulating strategies to reduce trade deficits with four trading partners, the United States, Japan, Germany and Thailand.

On the capital account, Mar'ie said, the April-September surplus was mostly attributed to the $4.7 billion net flow of private funds, of which $2.4 billion came from foreign direct investment.

But the flow of official funds (government funds) for the period was $400 million in deficit, Mar'ie said.

He projected the flow of official funds would turn into a $700 million surplus for the second half of the current fiscal year, between October 1996 and March 1997.

Official fund inflows -- mainly government offshore borrowings -- are expected to reach $3.3 billion in the second half of the fiscal year, while official fund outflows -- mainly government debt service payments -- are expected to reach $2.6 billion.

Mar'ie forecast the flow of private funds would also be positive. Indonesia is expected to enjoy a net inflow of $5.7 billion in private funds in the second half, of which $3.8 billion would come from foreign direct investment. (rid)