Despite multiple pressures on the macroeconomic environment due to the COVID pandemic -19, Bank Indonesia (BI) has for the past four successive months boosted the level of Indonesia’s foreign reserves to US$138.8 billion as of late February, enough for financing 10 months of imports and the government’s external debt. This level is higher than the international benchmark of three months of imports.
Reserve adequacy is consequential for the robustness of a domestic economy. One of the international reserves’ roles is to temporarily finance the balance of payment deficits. A growth trend in a country’s reserves shows it has a stronger buffer to maintain a sustainable external balance. Today, Indonesia manages a surplus trend of its trade balance, but maintaining greater reserves would improve domestic resiliency in anticipating sudden macroeconomic shifts.