KARACHI: The inflow through Roshan Digital Account reached $1.87 billion at the end of July, with the first month of the current fiscal year witnessing the second highest inflow since the RDA was launched in September last year.

Data released by the State Bank of Pakistan (SBP) on Thursday shows that the country received $307 million in July compared to $310m in June, reflecting a trend with inflow of over $300m per month.

The RDA was introduced by the SBP in September 2020 for non-resident Pakistanis to enable them to remotely open bank accounts in Pakistan through online digital portals without physically visiting branches.

The inflow through RDA was just $7m in September 2020. However, it started increasing and reached $1.87bn by the end of July.

July witnesses second highest inflow since the initiative launched in September

SBP Governor Dr Reza Baqir said last month that since September 2020, the RDA initiative for overseas Pakistanis had generated new financial inflows of $1.8bn which helped boost the country’s foreign exchange reserves.

The increased foreign exchange reserves, which stood at $17.85bn by the end of July, improved the country’s image in the international market. In July, Pakistan raised an additional $1bn through a tap issuance of its Eurobond that fetched $2.5bn in March.

The State Bank said that Pakistan’s external position was at its strongest in several years. In line with SBP projections in March, current account deficit fell to only 0.6 per cent of GDP. The SBP governor said this was the lowest current account deficit in 10 years, supported by all-time high exports and remittances.

He also said that unlike several previous growth upturns in Pakistan, the current economic recovery would be accompanied by external stability.

Despite higher inflows like record remittances, improved exports and inflow through RDA, the local currency depreciated by seven per cent against the US dollar over the past two months.

However, the State Bank governor recently said that Pakistan’s reserve buffers are expected to rise by another $2.8bn in August through the IMF’s planned new global SDR allocation.

He also said that current account deficit for the current fiscal year (FY22) could be in the range of 2-3pc, much higher than 0.6pc of GDP in FY21. This forecast badly hit the exchange rate and importers rushed to book maximum dollars fearing more appreciation of the US currency against the rupee.

The SBP said that up to 3pc current account deficit in FY22 would be better than that of 4pc and 6pc in FY17 and FY18, respectively. Pakistan needs up to $20bn for external payments in FY22 which is the reason for higher current account deficit.

The number of RDAs opened by overseas Pakistanis reached 199,747 by the end of July this year.

Published in Dawn, August 6th, 2021