KARACHI: The country has received over $4 billion through the Roshan Digital Account (RDA) through the end of April 2022, providing support for dwindling foreign exchange reserves.
The RDA reached $4.2 billion from September 2020 to April 2022, data from the State Bank of Pakistan (SBP) showed on Monday. In April, these entries reached 245 million dollars.
Expats from 175 countries opened 403,750 accounts, showing that an increased number of Non-Resident Pakistanis (NRPs) sent funds through this program. The number of digital accounts reached 388,494 at the end of March.
The latest data showed that these funds remained intact and the change of government in Pakistan did not affect these flows as expected earlier. The investment schemes, launched under RDA, known as Naya Pakistan Certificates (NPC), offer attractive rates in both Rupees and major foreign currencies such as USD, GBP and Euro.
The SBP data also showed that a significant amount of GDR funds are invested in both NPCs and the capital market. From September 2020 to the end of April 2022, total investment in NPCs was $2.8 billion, including $1.4 billion invested in conventional NPCs and $1.2 billion in compliant instruments in Sharia. Expats have invested $38 million in the stock market.
PCNs are high yield instruments. In dollar terms, three-, six-, and 12-month NPCs offer a profit rate of 5.5%, 6%, and 6.5%, respectively. For three- and five-year certificates, the yield is 6.75% and 7%, respectively. Rates of return in rupees are much higher, ranging from 9.5% to 11% over different durations.
These inflows contribute to accumulating the country’s foreign exchange reserves at a time when the country is in dire need of external financing. With the current account deficit soaring and the central bank’s foreign exchange reserves falling to $10.5 billion (enough to pay for less than two months of imports), the country’s economic difficulties are deepening.
Analysts said initiatives for overseas Pakistanis such as RDA should be prioritized and proper channel flows for remittances should be maintained to keep foreign exchange reserves afloat.
However, one immediate action that needs to be taken is the management of foreign exchange reserves. For this, every effort should be made to enter into negotiations with the International Monetary Fund for the resumption of the stalled $6 billion lending program.
“Additionally, an immediate task that needs to be undertaken is the management of foreign exchange reserves. For this, the focus should be on negotiating with the IMF,” the analysts added. In September 2020, the SBP enabled approximately nine million NRPs to open an account in Pakistan through a digital and online process without the need to visit a bank branch. These digital accounts, known as RDAs, fully integrate the Pakistani diaspora into their home country’s banking and payment system by providing access to funds transfer, payment of bills and fees, and e-commerce, according to the information on the SBP website.