Current Deficit Transactions Drop Following Fuel Subsidy Removal

TEMPO.CO, Jakarta - Bank Indonesia reported that the amount of current deficit transactions in the first quarter of 2015 reached US$3.6 billion, accounting for 1.8 percent of the Gross Domestic Product (GDP). The figure decreased compared to US$5.7 billion in the fourth quarter of 2015, accounting for 2.6 percent of the GNP, as well as compared to US$4.1 billion in the first quarter of last year, accounting for 1.9 percent of the GNP.

The improvement was due to decreasing oil imports as the international oil price declined, in addition to the positive impact of the subsidy reform initiated by the government.

“Our oil and gas trade balance is also improving,” Tirta Segara, Bank Indonesia’s executive director of communication department, said in press release on Friday, May 15, 2015.

The condition was also supported by narrowing deficit in the services trade balance following a drop in imports, declining number of national tourists who spent their holidays overseas, and declining primary income balance.

The government slashed the subsidies for Premium fuel and LPG by Rp230 trillion (US$17.7 billion). The government also applied a fixed subsidy for Solar fuel by Rp1,000 per liter. As a resulit, the subsidies for fuel and LPG for the current year in the 2015 State Budget has dropped from Rp274.7 trillion (US$21.1 billion) to Rp44.4 trillion (US$3.4 billion).

TRI ARTINING PUTRI