RDA inflows reach $4.4 billion till May

KARACHI: Pakistan received $4.4 billion through the Roshan Digital Accounts (RDA) during September 2020 to May 2022, data from the State Bank of Pakistan (SBP) showed on Tuesday.

The foreign exchange inflows fetched under RDA had reached $4.2 billion till the end of April. However, in May, the country received only $189 million inflows, down 22.85 percent month-on-month.

Non-resident Pakistanis (NRPs) opened 416,837 accounts from 175 countries, depicting they sent more funds home through RDA. These accounts stood at 403,750 at the end of April.

The SBP’s data also showed that from September 2020 to the end of April 2022, total investment made via Naya Pakistan Certificates (NPCs) amounted to $2.9 billion, with $1.5 billion invested in the conventional NPCs and $1.3 billion in Islamic certificates. The NRPs invested $39 million in the stock market.

Cumulative RDA flows saw slight increase of 4.53 percent at the end of May, compared with the period ended April 30, which was a positive sign for the cash-strapped country.

RDA inflows aid the country’s foreign exchange reserves at a time when external financing has dried amid a delay in the revival of the International Monetary Fund loan programme.

Pakistan’s foreign reserves have been depleting at a faster pace, falling to $9.7 billion, less than 45 days of imports due to surging current account deficit. Besides, the country is also facing double digit inflation.

The dire situation had prompted speculation around potential freeze on dollar accounts and RDA by the government. However, the Ministry of Finance and the SBP dismissed these baseless claims.

The rate of return on NPC is unchanged, but yields on Pakistan’s Eurobonds have increased significantly (2024 bond yielding 22 percent versus 7 percent highest on NPC), there might be some shift of funds between these investment avenues.

Increase in uncertainty on the economic and political front might also have contributed to the decline in NPCs and hence total RDA inflows, analysts said.

The investment schemes under RDA are available in rupee as well as mainstream foreign currencies such as US dollar, British pound, and euro. The NCPs are higher-yielding instruments. In dollar terms, the three-, six- and 12-month NPCs offer a profit rate of 5.5 percent, 6 percent and 6.5 percent, respectively.

For three- and five-year certificates, the return is 6.75 percent and 7 percent, respectively.

The return rates in rupee terms are much higher ranging from 9.5 percent to 11 percent on different tenors.