RDA inflows surge 29 percent to $182 million in March

KARACHI: Roshan Digital Account (RDA) inflows jumped 29 percent in March to $182 million, the State Bank of Pakistan (SBP) data showed on Thursday, marking a significant increase from $141 million in February.

The RDA scheme, launched in September 2020, has become one of Pakistan's main sources of foreign funding, with gross inflows reaching $7.660 billion as of March 2024.The increase in inflows is a welcome relief for Pakistan's economy, which is struggling with a deteriorating balance of payments and a heavy external debt burden that is far more than its foreign currency reserves.

Increased interest rates, a stable local currency, and improvement in Pakistan's external sector all contributed to a rise in foreign investors' confidence in the nation's economy and, as a result, a rise in inflows of Pakistanis living abroad through RDA. Similarly, foreign investments in the local debt market saw growth.

The RDA scheme contributes to the central bank’s foreign exchange reserves, which were maintained at $8 billion even after a $1 billion Eurobond repayment. For the next fiscal year, the nation has to repay roughly $24 billion in debt and interest, which is three times more than its foreign reserves.

Through the use of an online system, non-resident Pakistanis (NRPs) can use the RDA facility to remotely open accounts with particular Pakistani banks and carry out banking operations such as money transfers, utility, education, and other service payments, as well as investments in Pakistan.

Out of the $7.660 billion that was received, $1.576 billion was repatriated and $4.802 billion was used locally. The net repatriable liability was $1.283 billion after this.

According to SBP data, net investments made through RDA between September 2020 and March 2024 amounted to $871 million. Conventional Naya Pakistan Certificates (NPCs) attracted $312 million in investment, whereas Islamic NPCs received $528 million.

The amount invested in the stock market was $31 million. A total of $31 million in additional obligations existed. There were $1.283 billion in net repatriable liabilities and an account balance of $381 million.

The International Monetary Fund's executive board will meet on April 29 to discuss the approval of a $1.1 billion last tranche of $3 billion stand-by arrangement. This lending facility ends this month.

The government hopes to sign a long-term IMF programme, which will facilitate additional external financing and the adoption of structural reforms to address persistent problems in the economy. Muhammad Aurangzeb, Pakistan's Finance Minister, stated Islamabad might have a staff-level agreement on the new programme by the beginning of July.