The inflow generated through RDA (Roshan Digital Account) reached $1.87 billion at the end of July. This is the second-highest inflow since the RDA was launched last year in September.
There is an inflow of over $300m per month based on the data released by the State Bank of Pakistan on Thursday (5th August) which shows that the country received $307 million in July compared to $310m in June.
The State Bank of Pakistan introduced RDA for non-resident Pakistanis in September 2020. RDA is supposed to enable non-residents to remotely open bank accounts in Pakistan through online digital portals without physically visiting branches.
In September 2020, the inflow through RDA was only $7 million. However, it began to rise, reaching $1.87 billion by the end of July. Since its introduction in September, 199,747 accounts have been opened from 175 countries.
According to Dr. Reza Baqir, Governor of SBP (State Bank of Pakistan), said that Pakistan’s foreign reserves have improved since September 2020, due to an increase in inflows of about $1.8bn from the RDA project for overseas Pakistanis.
Pakistan earned a positive reflection in the international market as, by the end of July, the foreign exchange reserves amounted to $17.85bn. The country also generated another $1bn from a tap issuance of Eurobond which returned $2.5bn in March.
The governor also stated that this was the lowest current account balance in a decade, attained through the assistance of high exports and remittances. The State bank contributed by declaring that Pakistan had not achieved such a high position in the external market in many years. Moreover, the current account deficit lessened to only 0.6 % of the GDP, following the forecasted estimations by SBP.
Dr. Reza Baqir said that the current economic growth of Pakistan can only be accompanied by external stability, unlike previous growth upturns. The local currency has lost 7% versus the US dollar in the last two months despite the RDA inflows and stronger exports.
However, Pakistan’s reserve buffers are likely to increase by $2.8 billion in August because of the IMF’s planned increased worldwide SDR distribution, according to the governor of the State Bank. He also predicted that the current account deficit for the current fiscal year (FY22) might be in the region of 2-3 %of GDP, up from 0.6 %in FY21. This prognosis had a significant impact on the exchange market, and importers rushed to register as many dollars as possible, fearing more dollar appreciation against the rupee.
According to the SBP, a current account deficit of up to 3% in FY22 would be better than the 4% and 6% deficits in FY17 and FY18, respectively. Pakistan may require up to $20 billion in external payments in FY22, resulting in a bigger current account deficit.
