KARACHI: Through the Roshan Digital Accounts (RDAs), in a month overseas Pakistanis have invested the second greatest amount of $290 million in their home country, bringing the total inflows to a record high of about $4 billion by the end of March 2022.
Non-resident Pakistanis (NRPs) invested heavily in the Naya Pakistan Certificates, which were specifically given by the government to ex-pats, accounting for about two-thirds of the entire investment.
Depending on the duration of the investment period the government gives a competitive rate of return on foreign currency certificates, ranging from 5 to 7 percent per year.
On Monday the State Bank of Pakistan (SBP) stated on its official Twitter handle “The Roshan Digital Account had one of its greatest months ever in March, thanks to our overseas Pakistanis, with deposits of $290 million and 23,312 new accounts,”
“The RDA initiative has grown from strength to strength since its start in September 2020, with total deposits reaching $3.92 billion and 388,494 accounts created from 175 countries.”
Arif Habib Limited Head of Research Tahir Abbas remarked “The inflows are providing a tremendous boost to the country’s foreign exchange reserves’ sustainability,”
Following a healthy growth in the Gulf economy in the wake of a jump in crude oil prices that the area exports to the globe, Pakistanis living abroad have substantially increased their investment in RDAs. The worldwide oil price is currently holding at $100 per barrel, up from roughly $70 a year ago.
One of the most appealing features of the RDA program is that foreign Pakistanis can withdraw their full investment at any moment and without obtaining authorization.
RDAs have also been used by non-resident Pakistanis to invest in the Pakistan Stock Exchange (PSX) and real estate. The government has permitted them to purchase a home and a car for their relatives in their native country.
Abbas remarked “The foreign exchange reserves would have been reduced to a critical level (less than two months of imports) if the RDA inflows had not been solid,”
During the week ending March 25, 2022, Pakistan repaid a huge foreign syndicated debt of $2.91 billion. As a result, the country’s reserves dropped to a two-year low of around $15 billion this week. “After China rolls it over, around $2.3 billion of the repayment amount will revert to the foreign exchange reserves.”
RDA inflows have also helped to mitigate the effects of aggressive divestment in government debt products like T-bills and Pakistan Investment Bonds (PIBs). On the other hand, the magnitude of RDA investment, at $3.92 billion, has surpassed the peak volume of international investment, which was $3.6 billion in the first quarter of 2020 (January-March).
During the peak of the Covid-19 epidemic in the second half of 2020, the central bank designed the RDA. Using digital channels, the government permitted non-resident Pakistanis to create and run accounts at local banks in their host countries.
Aside from RDA, to their families back home foreign Pakistanis have been aggressively sending traditional worker remittances. They have sent a total of $20.14 billion in the first eight months (July-February) of the fiscal year 2022, which is 7.6 percent higher than the same period the previous year.