Indonesia: Current account deficit to continue through Q3: Finance Minister

• Sep 25, 2018

Finance Minister Sri Mulyani Indrawati has estimated that the large current account deficit will continue through to the third quarter, as government measures to curb imports had not produced significant results in the second quarter.

Sri Mulyani said that the current account deficit in the second quarter was 3.04 percent of gross domestic product (GDP), or US$8 billion, compared to $5.7 billion in the first quarter.

“We have already seen that the [current account deficit] has not narrowed this quarter,” the minister said in Jakarta on Monday, as quoted by kontan.co.id.

The large current account deficit has negatively affected the rupiah’s resilience against external pressures, in particular the impacts of the US-China trade war and  normalization in the United States.

In its efforts to reduce the deficit, the government introduced several polices to reduce imports, including a higher import tariff on consumer goods, a mandatory use of 20 percent blended biodiesel ( B20 ) for heavy vehicles and equipment, and postponing selected infrastructure projects.

Sri Mulyani said the B20 policy, which went into effect in early September, would not have an impact on the current account deficit this quarter. “We will see the result of the mandatory B20 policy in the fourth quarter,” she said. (bbn) 

Source: http://www.thejakartapost.com/news/2018/09/25/current-account-deficit-to-continue-through-q3-finance-minister.html