August 28, 2019 / 9:28 AM / 24 days ago

Indonesia to give $352 mln to state bank in bid to boost exports

JAKARTA, Aug 28 (Reuters) - Indonesia plans to next year double to 5 trillion rupiah ($351.96 million) an injection into a state bank in hopes it can help boost sagging exports and reduce the current account deficit, the finance minister said on Wednesday.

According to 2020 budget proposals talked about at a parliamentary hearing on Wednesday, the funds would go to unlisted Indonesia Eximbank. Of that amount, 4 trillion rupiah would be to increase its capacity and 1 trillion would be for a “special task” of supporting sectors with export potential.

This year, the government gave Eximbank a 2.5 trillion capital injection as part of efforts to boost exports.

In January-July, Indonesian exports fell 8% from a year earlier, hurt by multiple factors including the U.S.-China trade war and low commodity prices. This has contributed to the current account deficit staying wider than the central bank’s initial target.

Finance Minister Sri Mulyani Indrawati told reporters that making the injection could help lift exports and supports “our policy to reduce the current account deficit”.

Budget proposals show that separate from the 5 trillion rupiah, another 1 trillion rupiah will be allocated for “the strengthening of the current account balance” and be used to acquire stakes in offshore oil companies. No details were available.

Earlier this year, some government officials said they want to change the way state energy firm Pertamina’s overseas oil production is reported in the balance of payments, so it would be considered incoming foreign exchange instead of imports.

The central bank initially wanted to bring the current account deficit down to 2.5% of GDP this year, from 3% last year. But it revised this target to a range of 2.5%-3% for 2019 and 2020.

A parliamentary approval for the state budget is usually decided by early October.

$1 = 14,210 rupiah Reporting by Gayatri Suroyo; Editing by Richard Borsuk

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