REPUBLIKA.CO.ID, JAKARTA -- Indonesia's current account deficit (CAD) will drop in the first quarter this year, due to a slowdown in imports, according to Deputy Finance Minister Bambang Soemantri Brodjonegoro.

"Our import income tax has only come into effective since January, and we hope that it will help reduce the import of consumer goods," he stated here on Friday.

He noted that exports were also expected to contribute in reducing the current deficit as the depreciating rupiah can help in increasing the exports of manufactured goods.

"It is hoped that the rupiah depreciation will help in increasing exports, especially of manufactured goods. So, I still see a good opportunity," he emphasized.

Bambang forecast that the current account deficit in the first quarter this year will be far different from that reported in the fourth quarter of 2013, which was 1.98 percent of the Gross Domestic Product (GDP) or US$4 billion.

"Now, it is good, below two percent. If anything, it is hoped that the drop will not be far from two percent," he explained.

In the meantime, Finance Minister Chatib Basri has forecast that the current account deficit in the year will hover between 2 and 2.5 percent of the GDP, although it fluctuates every quarter.

"Based on the current account deficit cycle, it is generally low in the first quarter, but it is expected to rise in the second and third quarters, before it drops again in the fourth quarter," he reported.

According to Bank Indonesia, the central bank, the country's current account deficit in the fourth quarter of 2013 was recorded at US$4 billion or 1.98 percent of the GDP, which was lower than BI's forecast of three percent.

The central bank has recorded a significant improvement in the current account deficit due to the improvement in trade balance in the non-oil/gas sector and the condition was in line with BI's expectations.

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