Indonesia: Bank Indonesia projects current account deficit to hit USD25bn in 2018

• Bank Indonesia (BI) has projected the 2018 current account deficit to hit USD25bn, a significant increase over 2017’s USD17.53bn or 1.73% of GDP.
• BI senior deputy governor Mirza Adityaswara said that, despite the change in deficit, the economic situation was still stable as USD25bn was under the 3% threshold. He said that, to reduce the deficit, Indonesia needed to record an increase in foreign capital inflow.
• In addition, he mentioned that the change in deficit was the reason why BI reissued BI promissory notes (SBIs) in an auction on 23 Jul 18 as foreign investors are allowed to buy SBIs unlike the BI deposit certificate. BI hopes that the SBI could be an alternative instrument for foreign investors who want to invest in Indonesia.
• BI led the auction for the reissued SBIs with 9 and 12-month tenors. The central bank welcomed IDR14.2tr in total incoming bids and took in IDR5.9tr from investors. The winning bids were given a weighted-yield average of 6.04% for SBIs with a nine-month maturity period and 6.71% for those with a 12-month maturity. BI head of monetary management Nanang Hendarsah said investors had shown strong interest in the reissued SBIs, as reflected in the high value of the incoming bids.

External Link: http://www.thejakartapost.com/news/2018/07/25/bank-indonesia-projects-current-account-deficit-to-hit-25-billion-this-year.html