Indonesia to enjoy $1b in balance of payments
Indonesia to enjoy $1b in balance of payments
JAKARTA (JP): Indonesia, despite a loss in investors'
confidence in its economy, expects to enjoy a surplus of US$1.07
billion in the 1998/1999 balance of payments.
However, the surplus would come mainly from the staggering
official capital inflows, in the form of foreign debts, rather
than from private capital inflows, according to government
estimates.
Boediono, a director at Bank Indonesia, the central bank,
predicted Indonesia's capital accounts would record a surplus of
$6.47 billion this fiscal year.
The surplus would cover the country's current account deficit,
which was estimated to decrease to $5.39 billion from $6.34
billion in the current fiscal year.
"Therefore, by March 1999, the end of next fiscal year, our
foreign exchange reserves will increase by $1.07 billion,"
Boediono said.
The central bank said recently the country's foreign exchange
reserves totaled about $20 billion, enough to finance five months
of imports.
Boediono acknowledged that most capital inflows would come
from public sector debts, which would be $9.05 billion in
1998/1999.
That would include $2.4 billion in balance of payment support
from the International Monetary Fund, $1.4 billion fast-
disbursing foreign loans and $5.25 billion in project loans from
countries grouped in the Consultative Group for Indonesia.
Boediono said private sector capital would not reenter
Indonesia until the second half of next fiscal year, or by the
end of 1998.
Nevertheless, he said the government expected private capital
inflows would be $2.2 billion next fiscal year, down from $3.17
billion in the current fiscal year and $13.49 billion in
1996/1997.
The government and the private sector would spend $4.7 billion
to pay for the amortization of their foreign loans for 1998/1999,
down from $4.88 billion this fiscal year and $6.1 billion last
fiscal year.
In the trade sector, the government expected exports to grow
8.9 percent to $59.48 billion next fiscal year from $54.6 billion
this fiscal year. Non-oil exports would grow 13 percent to $49.2
billion from $43.58 billion.
Minister of Industry and Trade Tunky Ariwibowo said he was
optimistic exports would grow even more, considering Indonesia's
exports would now be more competitive due to the weakened rupiah.
He said imports would increase 4.3 percent to $48 billion next
fiscal year from $45.9 billion this fiscal year. Non-oil imports
would grow 6 percent to $44.68 billion from $42.15 billion.
Therefore, the government expected that Indonesia would book a
surplus of $11.42 billion.
But surplus in trade would be undermined by a large deficit in
services, which was expected to expand to $16.8 billion from
$14.99 billion this fiscal year.
The large difference between the deficit in services and
surplus in trade would result in a deficit in the current
account, which was expected to be $5.39 billion -- 2.6 percent of
the country's gross domestic product.
"Based on the above figures, we can say that we are
fundamentally okay. Then why does the rupiah fluctuate so wildly?
I think it's driven more by psychological factors than
fundamentals," Boediono said.
"I believe we can reach our target of Rp 4,000 per U.S. dollar
provided that we take care of these psychological factors as our
fundamentals are basically sound," he said. (rid)
Table: Indonesian balance of payments (US$ million)
1996-97 1997-98 1998-99
Description (actual) (estimate) (projection)
----------------------------------------------------------------
1. Exports (FOB) 52,038 54,605 59,484
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 43,586 49,252
2. Imports (FOB) -45,819 -45,957 -48,067
a. Oil -4,423 -3,533 -3,067
b. Liquefied natural gas -270 -271 -318
c. Non-oil and non-gas -41,126 -42,153 -44,682
3. Services -14,288 -14,990 -16,813
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 -10,587 -12,412
4. Current account -8,069 -6,342 -5,396
a. Oil 1,259 767 48
b. Liquefied natural gas 3,278 2,045 2,398
c. Non-oil and non-gas -12,606 -9,154 -7,842
5. Special drawing rights 0 0 0
6. Official capital 5,298 13,147 9,051
a. Program aid 0 7,572 3,800
b. Project aid and others 5,298 5,575 5,251
7. Debt repayments (principal) -6,118 -4,884 -4,789
8. Other capital 13,488 3,169 2,210
9. Total (4 to 8) 4,599 5,090 1,076
10. Errors and omissions - 701 -4,615 0
11. Monetary movements -3,898 -475 -1.076
Note:
Current account against GDP (%) -3.5 -2.7 -2.6
Debt Service Ratio (%)
- Government 14.6 12.0 10.9
- National 34.2 37.7 37.4
Source: The Ministry of Finance