RDA accounts attract $7.2bn from overseas Pakistanis

KARACHI: The country received gross inflows of $7.195 billion from Pakistanis living abroad through the Roshan Digital Accounts (RDAs) between September 2020 and December 2023, data from the central bank showed on Monday.

These inflows stood at $7.035 billion at the end of November.

On a month-on-month basis, the RDA inflows increased by 16.78 percent. In December alone, the holders of RDA accounts made deposits totaling $160 million, up from $137 million in the previous month.

Out of the total received funds, $1.538 billion has been repatriated, while $4.442 billion has been utilised locally. The net repatriable liabilities are $1.215 billion after this, according to the SBP data.

As of December 31, 2023, around 651,057 digital accounts had been opened. The rise in dollar inflows into digital accounts during the last 40 months (from September 2020 to December 2023) has supported Pakistan's foreign exchange reserves and remittances.

The forex reserves held by the SBP stood at $8.15 billion (enough for around two months of imports) as of January 5. In December, Pakistanis working overseas sent $2.4 billion home, a 13.4 percent rise from the same month the previous year.

RDA inflows are gradually increasing. The profit rates on Naya Pakistan Certificates (NPCs) increased, but RDA funds saw a slight rise from the prior month. It seems that the rate increase is insufficient given the tight global liquidity conditions and monetary policies across major economies. The government's next difficulty, meanwhile, appears to be maintaining the appeal of the Pakistani diaspora for these bonds in light of the likelihood of monetary easing in the US, Europe, and Pakistan due to the anticipated reduction in inflation pressure.

To make it easier for non-resident Pakistanis (NRPs) to open bank accounts remotely, the SBP introduced the RDA initiative in September 2020. Additionally, the banks provided the Pakistanis living abroad with an extensive array of services via a mobile application that was completely functional.

The SBP data showed that a total of $816 million in net investments were made through RDA between September 2020 and December 2023. $455 million was invested in Islamic certificates, and $331 million was placed in conventional NPCs. The amount invested in the stock market was $30 million. There were $24 million in additional liabilities. The net repatriable liabilities were $1.215 billion, with a $375 million account balance. RDA inflows provide the nation's foreign exchange reserves some boost, particularly in light of Pakistan's projected continued high level of external payments. As per SBP, Pakistan's external liabilities for FY24 amounted to $24.6 billion, including interest, said Optimus Capital Management in a report.

They have planned to roll over $12.4 billion. In the next two years, there are still at least $10-11 billion in repayments, as per Pakistan's public debt maturity profile, it said. Therefore, there will still be $22-24 billion in repayments standing again in FY25, it added.

The executive board of the International Monetary Fund completed the first review of Pakistan’s economic reform programme supported by its stand-by arrangement and approved the second tranche of about $700 million last week.