TEMPO.CO, Jakarta - Bank Indonesia (BI) reveals that Indonesia’s foreign-exchange reserves as of December 2016 stood at US$116.4 billion, an increase compared to the preceding month of US$111.5 billion. Repatriated funds in the tax amnesty program were among the contributors.
“Foreign-exchange reserves were boosted by the foreign fund inflow in the financial market concurrently with repatriated funds,” local lender Bank Permata economist Josua Pardede told Tempo on Tuesday, January 10, 2017.
December saw the end of the second period of the tax amnesty program. The Directorate General of Tax has announced that it has collected Rp141 trillion in repatriated funds in the tax amnesty program.
The issuance of US$3.5 billion global government bonds in December also helped bolster foreign-exchange reserves. Meanwhile, foreign net buy was recorded in the bond market at US$754 million.
“There was also a decrease in capital outflow through the capital market,” he said. According to Josua, rupiah exchange rates throughout December were relatively stable even though it weakened 0.7 percent at one point compared to the preceding month.
Increased foreign-exchange reserves also represent improved exports in December. Government debt is expected to decline. “BI’s monetary operation tends to accommodate [yield] in the auction of SBBI [Indonesia’s foreign exchange bill] amounting to US$320 million compared to the preceding month of US$310 million.”
All in all, Josua foresees an increase in foreign-exchange reserves for 2017 albeit at a lower year-on-year figure. “It will be affected by improvement in current account deficit [CAD] and drop in capital balance on the balance sheet,” he said. The factors will result in a lower balance of trade.
Josua, however, is hopeful that strong fundamentals of Indonesian economy can sustain potential global risks. “Meaning that foreign-exchange reserves at the end of 2017 are expected to stand at around US$115-120 billion.”
GHOIDA RAHMAH
