With the economy under intense pressure, as evident by depleting foreign reserves, a widening current account deficit and rupee crashing to a historic low, Pakistan must scramble to revive the International Monetary Fund program to avoid a potential Sri Lanka-like crisis.
“The government needs to roll back petroleum and electricity subsidies as agreed with the IMF as soon as possible to get back into the program,” said Head of Research Arif Habib Limited Tahir Abbas.
Launched in September 2020 amid the COVID-19 pandemic, Roshan Digital Account (RDA) inflows crossed $4 billion, reaching $4.2 billion in April 2022. Inflows clocked in at $245 million during April.
“If Roshan Digital Accounts were not launched, Pakistan’s foreign exchange reserves would have been in a highly critical stage,” seasoned economic journalist Salman Siddiqui said.
Without RDA and the support from Saudi Arabia and China, “We would have a crisis situation as the country may have moved towards bankruptcy just like Sri Lanka,” Siddiqui said. Pakistan has managed to dodge bankruptcy in the past by borrowing from friendly nations, agreeing to IMF terms or issuing bonds, he added.