RDA inflows surpass $6.5 billion by mid-Aug

Overseas Pakistanis injected $137 million through the Roshan Digital Account (RDA) into the economy in July, taking total inflows to $6.48 billion in 35 months since launch of the initiative in September 2020.

The inflows have helped stabilise the foreign exchange reserves, which stand at around $8 billion providing nearly two months of import cover.

According to central bank’s tweets, the inflows crossed the $6.5 billion milestone with over 600,000 bank accounts by August 12, 2023.

Data breakdown suggests that non-resident Pakistanis invested $3.88 billion in the country’s economy, out of the total of $6.48 billion, and withdrew $1.47 billion in the three-year period, leaving a balance of $1.13 billion.

Of the remaining balance of $1.13 billion, the expatriates poured $319 million into local and foreign currency-denominated Naya Pakistan Certificates (NPCs), $330 million into Shariahcompliant NPCs and $21 million into the Pakistan Stock Exchange (PSX).

Besides, they held cash deposits of $377 million in bank accounts in July, according to the State Bank of Pakistan (SBP)’s data.

Inflows through the RDA have slowed down in recent months compared to the record high of $290 million reached in March 2022.

Experts said the government and the central bank were required to revise upwards the rate of return on NPCs – both conventional and Shariah compliant – to encourage further inflow of investment.

A section of overseas Pakistanis is believed to have diverted their investment into developed economies after they jacked up their rate of return.

The Pakistan Democratic Movement (PDM) government had increased the rate of return to 7-7.5% on the US dollar-denominated NPCs, but it still remained unattractive as the US, a highly established and significantly less-risky market, was offering close to 6% return on investment in its treasury papers.