RDA and rising remittances

The Roshan Digital Account for overseas Pakistanis is indeed one good opportunity that the Covid-19 crisis has brought with it for a country awfully desperate for foreign exchange. Since the launch of the scheme by the SBP in collaboration with major commercial banks in September 10, 2020, as many as 87,833 Pakistanis residing in 97 foreign countries have opened RDAs with deposits amounting to $500 million, averaging $100 million a month, or $25 million a week. That the country has received $243 million though RDAs during the last six weeks — which comes to something around $40.5 million a week — shows the rise in the momentum of the foreign inflows.

No wonder Prime Minister Imran Khan is extremely relieved and has thanked the diaspora through a Twitter message on Tuesday. The PM’s tweet coincided with the central bank announcing that the money remitted by the foreign workforce has remained in excess of $2 billion for the eighth month in a row. The remittances in January 2021, according to the SBP, have been recorded at $2.3 billion, up by 19% year on year. The inflows have, however, slightly decreased as compared to December 2020 when the figure touched $2.4 billion. Overall, the workers’ remittances reached $16.5 billion during the July-January period of the ongoing fiscal year, registering a 24% increase over the same period last year.

Even though the share of RDA deposits, around $100 million a month on an average, in the overall amount of remittances that has been in excess of $2 billion a month is quite low, the scheme has the potential to attract more and more expatriates to remit money both for the purpose of family expenses and investment in bonds, bourse and immovable property. But for that, the government will have to work on concerns that the expat community harbours — ranging from slow processing for account opening and processing to the likelihood of data misuse. The government also needs to advertise the scheme in a proper manner so as to extract its full benefits.

Published in The Express Tribune, February 19^th, 2021.

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