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Indonesia's BOP posted a surplus of US$2.6 billion in 2020

Indonesia's balance of payment (BOP) recorded a surplus of US$2.6 billion last year, continuing its surplus of US$4.7 billion a year earlier and reinforcing external resilience amid the COVID-19 pandemic, according to Bank Indonesia (BI).

"The development was fueled by a decline in the current account deficit and the capital and financial account surpluses," Executive Director of the BI Communication Department Erwin Haryono noted in a written statement released on Friday.

The BOP posted a low deficit of US$0.2 billion in the fourth quarter of 2020, driven by a current account surplus amid the low capital and financial account deficit.Consequently, foreign exchange reserves at the end of 2020 increased to US$135.9 billion, equivalent to 9.8 months of imports and the government’s foreign debt repayments. The foreign exchange reserves are above the international adequacy standard.

The current account surplus continued in the fourth quarter of 2020, supported by an increase in the goods trade balance surplus. In the fourth quarter of 2020, the current account posted another surplus of US$0.8 billion, or 0.3 percent of the national gross domestic product (GDP), continuing the surplus of US$1 billion in a quarter earlier, or 0.4 percent of the GDP.

Haryono remarked that the current account deficit in 2020 stood at US$4.7 billion, constituting 0.4 percent of the GDP. The current account deficit plunged sharply as compared to US$30.3 billion, or 2.7 percent of the GDP in 2019.The declining deficit was in line with the limited performance of the country's exports due to low demand in partner countries during the COVID-19 pandemic, coupled with declining imports due to low domestic demand.

Meanwhile, the capital and financial accounts in 2020 continued to post a surplus of US$7.9 billion owing to investors' optimism about domestic economic recovery and abating uncertainty in global financial markets, especially in the second semester of 2020//ANT