In a statement Bank Indonesia said the current account deficit (CAD) narrowed in Q4-2016 in line with improvements in both the global and domestic economy. The current account registered a deficit of USD $1.8 billion (0.8 percent of GDP) in Q4-2016, lower than the previous quarter's deficit of USD $4.7 billion (or 1.9 percent of GDP) as goods and primary income accounts improved. The goods trade surplus rose as the economies of trading partners improved and global commodity prices rebounded. Meanwhile, the primary income deficit decreased in accordance with the schedule of lower interest payments on government debt securities. The current account performance in Q4-2016 was also better than in the same period one year ago which recorded a deficit of USD $4.7 billion (2.2 percent of GDP) due to an increase in the goods trade surplus and a decrease in the services trade deficit.

Indonesia's capital and financial account in Q4-2016 recorded a sizable surplus that surpassed the CAD. The capital and financial account surplus in Q4-2016 reached USD $6.8 billion, mainly attributed to other investment surplus in line with the continued tax amnesty fund repatriation. Nevertheless, the capital and financial account surplus was lower than the Q3-2016 surplus. This was caused by the reversal of portfolio investment (to deficit) as foreign capital outflows from Indonesian stocks and rupiah-denominated government debt securities occurred after the surprise victory of Donald Trump in the 2016 US presidential election, as well as the lower direct investment surplus due to outflows in the mining sector.

As a result, Indonesia's balance of payments (BOP) in Q4-2016 recorded a surplus of USD $4.5 billion. The BOP surplus in Q4-2016 in turn led to an increase in foreign exchange reserves to USD $116.4 billion at the end of Q4-2016 from USD $115.7 billion at the end of Q3-2016 or USD $105.9 billion at the end of 2015. The amount of reserve assets was adequate to finance 8.4 months of imports and government external debt repayment, well above the international standards of reserves adequacy.

Regarding full-year 2016, the BOP turned into a surplus in 2016 underpinned by a decline in the CAD and the increase in the capital and financial account surplus. The 2016 BOP recorded a surplus of USD $12.1 billion, a turnaround from the USD $1.1 billion deficit in 2015. The CAD fell from USD $17.5 billion (2.0 percent of GDP) in 2015 to USD $16.3 billion (1.8 percent of GDP) in 2016, supported by an improvement in the goods and services trade performances. Trade in goods surplus increased on account of a greater decrease in imports than exports. Nonetheless, the pace of decline in imports in 2016 was not as deep as the import decline in 2015 in line with the improving domestic economy.

Similarly, the decline in exports was milder compared to the decline in exports in the preceding year on the back of rising global commodity prices. The trade in services deficit also decreased following the decline in imports of goods. On the other hand, the capital and financial account surplus in 2016 increased significantly to USD $29.2 billion from USD $16.8 billion in 2015. This growth was primarily driven by the higher surplus of direct investment and portfolio investment along with a decrease in other investment deficit in line with positive investor perception of the domestic economy and the sound implementation of the tax amnesty program.