RDA sees $160m inflows in Dec, signalling recovery

Increase 17% from $137 million in November, up 14.29% from Dec 2022

LAHORE:

Foreign currency inflows from overseas Pakistanis through the Roshan Digital Account (RDA) increased to $160 million in December 2023, showing a slight improvement compared to November 2023.

According to data released by the State Bank of Pakistan on Monday, RDA inflows were recorded at $137 million in November 2023, indicating a 17% increase in December figures. Compared to the corresponding month in 2022, the latest figure is up by 14.29%. In December 2022, RDA inflows were recorded at $140 million.

SBP data reveals that the total RDA inflow for the calendar year 2023 was $1.619 billion, a decline of almost 33% from $2.416 billion in FY22. Further data shows that out of the total received inflows of $160 million in December 2023, $7 million has been repatriated so far, while an amount of $120 million has been locally utilised, with a remaining net repatriable liability of $34 million.

The number of RDA accounts increased to 651,057 in December 2023 compared to 640,875 in November of the previous year.

RDA, initiated by the SBP in September 2023, aims to channelise cash inflows through the banking system, discouraging the traditional Hundi and Hawala network frequently used by Pakistanis to send investments to their home country. The SBP, in an effort to encourage the public, offers up to 8% profit on United States dollar investments in Pakistan.

Since its inception, the total inflow through RDA stands at $7.195 billion by December 2023. Out of this figure, $1.5538 billion has been repatriated, with a local utilisation of $4.442 billion. As of December 2023, the total net repatriable liability stands at $1.215 billion, with $786 million in Naya Pakistan Certificates, $331 million in conventional NPC’s, and $455 million in Islamic instruments.

Read Foreign currency inflow hopes aid rupee’s uptrend

SBP data further states that an amount of $375 million is Balance in Accounts, with an improved Roshan Equity Investments at $30 million.

Financial experts attribute the 33% decline in RDA inflows in FY23 to the country’s overall economic and political situation. Global inflation is another factor affecting these decreasing inflows, as overseas Pakistanis realign their investments based on the situation in the countries where they reside.

They also note that the economic condition in Pakistan has been stagnant for almost two years, leaving little room for the average expat to invest in the country. However, they express hope that with the arrival of a new government in a few weeks, the economic situation may improve, and RDA inflows might once again surpass the $2 billion mark in the ongoing calendar year.

On Monday, the rupee climbed to 280.24 against the US dollar, gradually stabilising in the interbank market.

Published in The Express Tribune, January 16^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.