RDA inflows reach $5 billion in 24 months

KARACHI: Pakistan received $5.0 billion in inflows through the Roshan Digital Account (RDA) in two years, supporting the nation’s depleting foreign exchange reserves, data from the central bank showed on Tuesday.

Non-resident Pakistanis (NRPs) have opened 456,732 accounts from 175 different countries. At the end of July, there were 441,344 of these accounts, State Bank of Pakistan (SBP) data showed.

The SBP's figures also revealed that the entire amount invested through Naya Pakistan Certificates (NPCs) from September 2020 to the end of August 2022 was $3.185 billion, with $1.667 billion invested in conventional NPCs and $1.518 billion in Islamic certificates. The NRPs made $43 million in stock market investments.

These inflows clocked in at $187 million in August, the lowest monthly inflow since February 2021.

NRP’s worries about the country’s deteriorating balance of payments position, which led to outflows from this were to blame for the decrease in August’s RDA funds.

Officials from the SBP, however, said that the outflows were caused by the maturation of investments in NPCs, which began in early 2021. The repatriation of these assets is a crucial component of RDA, around which the product was created to inspire public confidence.

Another factor contributing to the outflows is inflation. A spike in inflation is causing people to tap their savings to make ends meet. Only $800 million were repatriated during the previous 23 months, according to the SBP.

The RDA scheme, which was launched in September 2020 to give the expatriates access to the local financial market, is becoming increasingly popular among Pakistanis living abroad in all parts of the world. The government has received more RDA inflows than it has from the International Monetary Fund (IMF) bailout package and friendly states, which is good.

Following the completion of the combined seventh and eighth reviews of the Extended Fund Facility last week, the IMF released $1.16 billion to Pakistan, bringing the programme's total receipts to $3.9 billion. billion.

As of August 26, the foreign reserves held by the SBP have fallen to $7.7 billion—enough to cover a little more than a month of imports. However, the IMF’s latest disbursement would help improve the reserves.

According to IMF estimates, the gross external financing requirement for this fiscal year was $31 billion, while available financing was projected at $33 billion as against SBP’s target of $37 billion for the same year.

Besides, investing in certificates and the stock market, RDA provides a very good option to overseas Pakistanis for purchasing property under its feature Roshan Apna Ghar as overseas Pakistanis are helping their relatives in Pakistan to purchase a property easily, according to bankers.

Overseas Pakistanis get huge gains in foreign exchange, while they purchase property in Pakistan for themselves or their relatives through RDA Apna Ghar. The value of the property would appreciate too in the future.

This is a magnificent return on investment for expatriate Pakistanis. Similarly, the value of cars appreciates in Pakistan after a few years rather than depreciating hence RDA Apna Car is not only a facility but a means of handsome investment.

The overseas Pakistanis can support the flood-affected Pakistan in challenging times which can be done rapidly through donations using RDA services.

The SBP is working to introduce Roshan Business Account in near future in order to provide enhanced facilities to overseas Pakistanis for doing business and investing in Pakistan. The banking regulator is also working to launch products such as a pension, insurance, and Takaful under RDA.

The RDA offers expatriates attractive profit rates on conventional and Sharia-complaint NPCs. Bankers expect the number of RDAs to reach 0.5 million to 1 million, including its inflows; surging to nearly $10 billion in the next year.