Although the government recently modified its rate of return, the flow of foreign investment made through Roshan Digital Accounts (RDAs) by Pakistanis abroad in a variety of assets increased to $125 million in February but remained relatively modest.
Compared to the 26-month low of $110 million in January, the inflows have increased by $15 million to $125 million this month. Nevertheless, statistics issued by the State Bank of Pakistan (SBP) on Wednesday showed that they had the second-lowest ranking in the previous 27 months in February.
When foreign currency reserves are at a critical level and the government is managing a high risk of defaulting on foreign debt payments, the decrease in inflows is concerning for the government.
Roshan Digital Accounts Inflow Fall To $146 Million, Lowest Since Dec 2020
According to data, gross investments made through RDAs have grown steadily over the past 30 months since they were established in September 2020, reaching $5.8 billion in February.
Yet, because non-resident Pakistanis have continued to invest and remove money throughout time, net investment is much smaller (nearly half) than gross investment. A sizable portion of RDA investment is often invested in Naya Pakistan Certificates (NPCs).
An anonymous financial analyst claimed that for the government to continue luring noteworthy investments through RDA, the rate-of-return (RoR) on the savings certificates needs to be increased. Data show that non-resident Pakistanis have invested $3.86 billion in stock market investments and savings bonds.
According to the data’s breakdown, they may have invested $49 million at the Pakistan Stock Exchange, $1.82 billion in shariah-compliant NPCs, and $1.83 billion in conventional NPCs (PSX).
The expert highlighted that the government recently increased the RoR on saving certificates denominated in rupees and foreign currencies. Depending on the length of the investment and the foreign currency used, it offered a new RoR in the range of 4% to 8%. For a minimum of three months and a maximum of five years, it provided investments in three different foreign currencies, including the US dollar, the pound, and the euro.
Depending on the investment duration of three months to five years, the RoR on rupee-denominated certificates grew from a minimum of 13.50% to a maximum of 15.5%.