The Indonesian balance of payments, 1950-1976 - some new estimates

Abstract

The objective of this thesis has been to put together, for the first time, a comprehensive set of estimates of the Indonesian balance of payments between 1950 and 1976, and to identify for analysis the major issues highlighted by the new estimates . The new estimates were built up from a wide range of data, and incorporate imputed values for a number of important items which go unrecorded in the official estimates . The revised series for the principal balance of payments items are, as far as possible, consistent over time, as well as comprehensive , and it is possible to indicate the direction, and, in broad terms, the extent of bias remaining . By a comparison of the new with the official estimates, the extent and duration of export smuggling has been delineated. The new estimates for the capital account indicate the very significant contribution that capital inflow has made to Indonesia's external resources. In accounting terms, these inflows have financed current account deficits which the official figures have understated for every year since the mid 1950s. Finally, when the new series for exports and for capital flows are brought together with the official foreign exchange reserve figures in a new set of balance of payments accounts, it is possible to indicate the order of magnitude of unrecorded imports of goods and services . The results of this study are significant in two ways. On the one hand, they point to directions in which future work to improve the data might usefully be channelled. On the other hand, they highlight issues to which the attention of policy- makers might profitably be directed. Analysis of the terms of trade, and of the changing composition of exports , imports and capital flows is undertaken as a basis for an investigation of balance of payments policy issues in the areas of geographic concentration of trade and payments , smuggling, and employment aspects of exchange rate policy.