Bank Indonesia Confident B20 Will Lower Trade Deficit

ONE of the expected positive impact of a mandatory expansion of B20 is lowering current account deficit. It is likely going to happen since the program would cut fuel imports. Bank Indonesia (BI) is confident the country’s current account deficit is lowering by the end of this year. “This year ,import decrease to US$2,2 billion. Next year, it will be three times higher to US$6,6 billion. Export will also increase to US$4-5 billion,” BI Governor Perry Warjiyo said, Friday (31/08/2018) as quoted by detikfinance. BI has projected that the country’s current account deficit will reach 2,5 percent of  Gross Domestic Product (GDP) this year. One of the main factor is the expanded B20 mandatory program that will be applied both in Public Service Obligation (PSO) sector and non-PSO. “B20 policy will cut import to US$2,2 billion this year and next year will be around US$9-10, added by export increase,” Perry said. So far, the country`s current account deficit remains at US$8.02 billion, or 3 percent of GDP, in the second quarter of 2018. It is Indonesia`s highest quarterly deficit since Q3-2014. Next year, it is expected to decrease to 2,5 percent of GDP. ***