RDA inflows reach $8.25 billion as of June

KARACHI: Pakistan received the gross inflows of $8.255 billion under the Roshan Digital Account (RDA) as of June 2024, the central bank’s data showed on Friday.

RDA is a commendable initiative to generate foreign currency deposits and act as a reliable substitute source of funding. These inflows support the nation’s foreign exchange reserves and aid in the repayment of its foreign debt. As a result, the value of the Pakistani rupee relative to the dollar strengthens.

RDA inflows decreased to $200 million in June from $224 million in the previous month.Of the $8.26 billion in funds received between September 2020 and June 2024, $1.61 billion has been repatriated and $5.21 billion has been used locally. The net repatriable liabilities consequently stayed at $1.43 billion.

Through 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.

Inflows in RDAs increase the foreign reserves of commercial banks, which is also reflected in the country’s total forex reserves. As of July 26, Pakistan’s foreign currency reserves held by the central bank stood at $9.1 billion, sufficient to cover over two months of imports.

The country’s total reserves stood at $14.39 billion, with the reserves of commercial banks at $5.29 billion.The improvement in the current account deficit brought about by an increase in exports and remittances, as well as a revival of financial inflows, contributed to the buildup of the SBP’s reserves.

According to the SBP, Pakistan’s external debt obligations would be managed comfortably and timely because of improved foreign fund inflows and manageable current account deficits.The SBP expects that its reserves will reach $13 billion by the end of this fiscal year. Pakistan needs to repay $24.8 billion in external debt during the current fiscal year.

Finance Minister Muhammad Aurangzeb said that a $12 billion rollover by friendly countries is anticipated, and the International Monetary Fund is expected to approve the $7 billion Extended Fund Facility by the end of this month.

According to SBP data, a total of $978 million in net investments were made through RDA between September 2020 and June 2024. Out of this amount, $348 million was invested in conventional Naya Pakistan Certificates (NPCs), while $592 million was invested in Islamic NPCs. Also, $27 million was invested in the stock market, with additional liabilities totalling $31 million. Net repatriable liabilities amounted to $1.43 billion, and the account balance stood at $42 million.