Bank Indonesia to Keep Current Account Deficit Below 3 Percent

TEMPO.CO, Jakarta - Bank Indonesia said it is confident it would be able to keep the country`s current account deficit below 3 percent by the end of this year.

By the end of the first half of the year the current account deficit already reached 2.6 percent of the country`s Gross Domestic Product (GDP).

"Until the end of the year we are confident the deficit could be kept below 3 percent," Executive Director of Statistic Department of the Central Bank Yati Kurniati told reporters on Friday.

Yati said Bank Indonesia will continue to cooperate with the government to keep the current account deficit more under control.

Among the efforts is to draw more foreign tourists by developing the tourism sector potential to contribute to foreign exchange income in short term, she said.

The same strategy has been adopted by Thailand, which has succeeded in developing its tourism industry resulting in a surplus in its service account, she said.

"We will develop foreign exchange earners such as tourism sector to reduce deficit in service account," she went on to say.

Bank Indonesia appreciates the government creating an integrated service system to attract investments mainly export and import substitute-based investments in a bid to cut current account deficit, she said.

In addition, Bank Indonesia will continue to strengthen the policy mix to maintain stability amid uncertainties in the global financial market , and policy coordination with the government to push for continuation of structural reform, she said.

Bank Indonesia will continue to watch the global developments that could affect the prospects of the country`s balance of payments such as the high global financial uncertainty, the inclination to protectionism in international trade and oil price hikes, she said.

She said the country`s balance of payments deficit widened to US$4.3 billion in the second quarter of the year from US$3.9 billion earlier.

"Ahead, the balance of payments performance would remain good and could sustain resilience of external sector," she predicted.

Earlier, the Central Bank said the country`s current account deficit reached US$8 billion or 3 percent of the GDP in the second quarter of this year, up from US$5.7 billion or 2.2 percent of GDP in the previous quarter.

One cause of the increase in the current account deficit was shrinking surplus in non-oil/gas commodity trade balance,and widening deficit in oil and gas trade balance.

ANTARA