REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) predicted on Wednesday the country's current account deficit (CAD) would widen in the second quarter of this year compared with the first quarter.

"The current account deficit could be less than 2 percent of the Gross Domestic Product (GDP) in the first quarter of this year," Bank Indonesia's deputy governor Mirza Adityaswara said.

Based on experience, the current account deficit is wider in the second quarter than in first quarter, Mirza said.

He said a series of polices have been issued and implemented by the government expected to cut the deficit especially in the service sector.

"Indonesia has continued to suffer a deficit in its current account balance mainly due to large cost of shipping service and transfer of dividend from foreign companies operating in the country," he said.

He described as positive a number of policies issued by the government such as visa free facility for tourists from more countries, tax incentive for companies reinvest their profit in Indonesia.

"With the policy funds that have always been transferred out of Indonesia will remain in the country," he said.

Bank Indonesia also appreciates the policy to strengthen the country's insurance industry as the country still has a deficit of up to US$ billion in that sector.

"We still pay out insurance premiums every year. Therefore, the policy to strengthen the country's insurance industry is good," he said.

He said as long as the government carry on with structural reform , the market will respond positively.

Deficit in current account balance was a result of imports of goods and service exceeding exports.

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