Record Deficit! Indonesia's Balance of Payments Worst on Record

Jakarta, CNBC Indonesia — Indonesia’s Balance of Payments (NPI) has just posted the largest deficit on record, at least in the data available dating back to 2004. Bank Indonesia (BI), in its latest report, announced that the NPI for Q1-2026 recorded a deficit of US$9.1 billion. This figure is particularly striking as it not only signals heavy pressure on the external sector but also marks the deepest NPI quarterly deficit since BI began compiling quarterly NPI data in 2004. The deficit stood in contrast to the position in the previous quarter. In Q4-2025, the NPI still recorded a surplus of US$6.1 billion. Compared with Q1-2025, the pressure was also much heavier. In Q1-2025, the NPI registered a deficit of US$787 million. Thus, the NPI deficit at the start of this year widened more than elevenfold compared with the same period last year. The deterioration in the NPI was driven by the current account returning to a deficit, as the goods trade surplus narrowed and the services balance continued to be in deficit. At the same time, the capital and financial accounts also swung to a deficit, chiefly because other investments posted substantial pressure amid global financial market uncertainty. Current Account Deficit Largest Since 2019 The current account again posted a sizeable deficit in Q1-2026. BI noted a current account deficit of US$4.0 billion, or about 1.1% of GDP. This deficit widened from US$2.47 billion in Q4-2025, or around 0.7% of GDP. Compared with the same period last year, the pressure was also much greater. In Q1-2025, the current account recorded a deficit of about US$200 million, or 0.1% of GDP. With this position, the Q1-2026 current account deficit was the deepest since Q4-2019, when the current account posted a deficit of US$8.04 billion. The widening current account deficit is one of the main factors behind the deterioration of the NPI in early 2026. Note that the current account reflects the flow of foreign exchange from exports and imports of goods and services, and income flows between countries. If the current account is in deficit, it means foreign exchange outflows to service payments abroad exceed inflows from the real economy. BI explained that the pressure on the current account occurred amid a narrowing surplus in the goods trade balance. The goods balance remained in surplus at US$8.0 billion in Q1-2026, but lower than Q4-2025’s US$10.2 billion. The non-oil and gas trade surplus also contracted. In Q1-2026, the non-oil and gas trade balance still posted a surplus of US$13.3 billion, down from the previous quarter’s US$16.0 billion. BI’s Head of Public Communications, Ramdan Denny Prakoso, said the non-oil and gas trade balance remained in surplus albeit lower than in the preceding quarter, in line with a slower global economy and disruptions to international trade supply chains. Meanwhile, the oil and gas trade balance still recorded a deficit of US$5.3 billion in Q1-2026. This figure actually improved from Q4-2025’s deficit of US$5.7 billion, amid domestic economic activity remaining resilient. Similarly, the services balance, as usual, remained in deficit. In Q1-2026, the services balance deficit amounted to US$4.6 billion. This figure is indeed better than Q4-2025’s deficit of US$5.3 billion, but still shows that Indonesia pays more for services to foreign countries than it receives. Financial Transactions Also in Deficit, Other Investments the Real Culprit The pressure on the NPI in Q1-2026 did not come solely from the current account; the financial account also recorded a sizeable deficit. In Q1-2026, Indonesia’s financial account registered a deficit of US$4.9 billion, reversing from Q4-2025 which still recorded a surplus of US$8.8 billion. Note that the financial account is a component of the NPI that records flows of capital in and out, including direct investment, portfolio investment, financial derivatives, and other investments such as loans, deposits, and other financial transactions. Interestingly, the deficit in the financial account in Q1-2026 was not due to direct or portfolio investment; these two components still posted positive values. Direct investment remained in surplus at US$2.0 billion, while portfolio investment also remained in surplus at US$730 million, though both declined from the previous quarter. Nevertheless, there were still capital inflows into Indonesia, in the form of long-term investments and investments in financial instruments such as equities and government bonds. However, the major pressure came from the ‘other investments’ component. In Q1-2026, other investments recorded a deficit of up to US$7.8 billion. This is what made the financial account deficit. In simple terms, other investments cover financial transactions such as loans, deposits, trade credits, and other liabilities and financial assets between Indonesia and abroad. When this line is heavily in deficit, it means there is outflow pressure from the financial side outside direct and portfolio investments. This condition compounds the pressure on the NPI. In normal circumstances, the financial account often cushions when the current account is in deficit.