Inflows through the Roshan Digital Account (RDA) decreased by 11 percent to $200 million in June, down from $224 million in May, according to the latest data from the State Bank of Pakistan (SBP). In June, $14 million was repatriated, and $142 million was utilized locally.
The data, released on Friday, indicates that the country has received $8.255 billion through RDA since its launch in September 2020 until the end of June 2024.
The initiative was introduced to attract dollar inflows and mitigate the economic impact of the rapid outflow of hot money due to the Covid-19 pandemic in 2020, which saw approximately $4 billion exit domestic bonds.
A significant portion of these inflows, $5.212 billion, was utilized locally, providing substantial relief to the government, which has been grappling with dollar shortages.
Overall, inflows have surpassed $8.2 billion since the initiative’s launch in 2020.
To conserve foreign exchange, the government drastically reduced imports in the fiscal year 2022-23, leading to a contraction in growth, with continued import restrictions into FY24.
Cumulatively, about $1.6 billion of the $8.2 billion in overall inflows have been repatriated, with total repatriable liabilities standing at $1.4 billion by the end of June 2024.
Of the total outstanding liability, $940 million is held in Naya Pakistan Certificates (NPCs), including $348 million in conventional NPCs and $592 million in Islamic instruments.
Despite recent improvements in Pakistan’s rating by Fitch and S&P, the country remains unable to raise dollars through international bond markets.
The government is now exploring the Chinese market with the potential launch of panda bonds. However, financial experts in Pakistan believe that the timing is not suitable, stressing that the Chinese market will not respond unless Pakistan resolves its debts and payment issues with Chinese investors.
The government is considering engaging marketing agencies for the Panda Bonds launch, having received bids from three Chinese and two Pakistani companies.
However, financial experts caution that these companies will be paid agents and not accountable for the success of the bonds. They emphasize that the government’s resolution of Chinese debt re-profiling issues is crucial for a positive market response.
Experts also believe that the decline in RDA inflows in June reflects increasing debt servicing challenges, which may discourage investors.
