Middle finger from overseas Pakistanis - Sept RDA inflows hit 20-month low

stoic

Minister (2k+ posts)
KARACHI:
Foreign currency inflows, from overseas Pakistanis through Roshan Digital Accounts (RDA), slowed to a 20-month low at $168 million in September 2022. This, however, helped gross receipts surpass the $5 billion mark.

Since the launch of RDA 25 months ago, the country has received a total of $5.1 billion, reported research houses on Thursday.

“September’s gross inflows are the lowest monthly inflows recorded after January 2021,” AHL Research reported.

The flows have helped stabilise the country’s foreign currency reserves and supported the rupee against the US dollar in interbank market time-to-time as well. The reserves would have fallen to less than two-week import at around $3billion today if the inflows had not been realised, the research report added.

Most RDA inflows are invested in Naya Pakistan saving certificates while a few are invested in the Pakistan Stock Exchange (PSX).

Speaking to the Express Tribune, Fahad Rauf, Head of Research at Ismail Iqbal Securities said, “In the wake of a deteriorating investment climate, overseas Pakistanis have slowed down investing through RDA.”

The investment climate has suffered amid growing concerns of Pakistan defaulting on international payments, high yields on Pakistan’s US dollar-denominated bonds (Eurobond and Sukuk) in the world markets and the devastating floods.

Secondly, a continuous hike in interest rates by global central banks have also made investment abilities scarce.

Read Remittance inflow increases by 8%, SBP reports

“The government should consider revising the rate of return on foreign currency denominated Naya Pakistan certificates for overseas Pakistanis,” he said, citing that the government has recently increased profit margins on the rupee denominated Naya Pakistan certificates.

Commenting on the subject, the ministry of finance’s former advisor, Dr Najeeb Khaqan said, “Dollar inflows are Pakistan’s lifeline. RDA inflow has slowed down to (net) $79 million in September 2022.”

Uncertainty, disorderly movement in the foreign exchange market and a delay in hiking the rates (of return) are among others reasons for the slowdown in inflows. Authorities can double their efforts and embassies should push to tap the millions of expats, he remarked.

Separately, the rupee has maintained an upward rally on the 10th successive working day, as it gained another 0.90% (or Rs2) to close at a new one-month high at Rs221.94 against the US dollar in the interbank market on Thursday.

With this, the rupee has cumulatively gained 7.41% (or Rs17.77) in the past
10 days.

Rauf believes that the Pakistani currency may recover another Rs5-10 under the current cycle. However, he added that, “It seems these gains are unsustainable, considering international oil prices have bounced back to the higher side, foreign exchange reserves have continued to deplete, export earnings have also witnessed a decrease, export firms are shutting down and Europe is fearing recession.”

 

stoic

Minister (2k+ posts)

While patwaris celebrate Dar's return the reality is that the ship is sinking fast and none of these PDM bastards have any clue what to do.​


Pakistan may miss IMF targets​

Global lenders not in the mood to give substantial concessions on agreed conditions

ISLAMABAD:

The World Bank has estimated major slippages in the targets of fiscal deficit, debt and external sector agreed by Pakistan with the International Monetary Fund (IMF), emphasising that Islamabad should not abandon the prudent path despite worst floods since independence.

The biannual Pakistan Economic Update of the World Bank suggested that the international lenders were not in a mood to give any substantial concessions to Islamabad on the agreed conditions, particularly the increase in electricity prices.

The report showed that the primary budget balance would be negative by 3% of gross domestic product (GDP) against the IMF’s target of 0.2% surplus, marking the biggest slippage. The debt-to-GDP ratio will slip to 71.7% by the end of current fiscal year against the earlier IMF forecast of 68.2%.

Importantly, the current account deficit is projected at 4.3% of GDP, or around $19 billion, by the World Bank, against the IMF’s earlier estimate of 2.5%, increasing the country’s foreign loan requirement.

IMF programme targets could undergo major changes during the upcoming visit of a fund’s mission, tentatively planned from October 26 to November 4.

Inflation would spike while the fiscal situation would worsen, revenues would fall and tax base would shrink, said Derek Chen, senior economist at the World Bank. “We expect fiscal policy to remain expansionary,” said Chen.

Projections have been made on the assumption that Pakistan will stay in the IMF programme, according to the senior economist.

In case, Pakistan’s IMF programme again goes off track, the numbers can further deteriorate due to the fiscal and monetary indiscipline.

The World Bank released the report the day Moody’s credit rating agency jolted Pakistan by giving it junk rating of Caa1, which is slightly above default rating.

Caa1 rating means that Pakistan’s debt is “judged to be of poor standing and is subject to very high credit risk”.

Read 'IMF should issue new reserves to help countries tackle crises'

The Ministry of Finance has strongly contested the rating action, saying it has been carried out unilaterally without prior consultations and meetings with teams of the Ministry of Finance and the State Bank of Pakistan.

Moody’s “worsening near- and medium-term economic outlook” does not depict the correct picture due to gaps in information available with the rating agency and its use of estimations is not grounded in fundamentals, it said.

The World Bank said that Pakistan’s economic growth rate may remain around 2%, down from the target of 5%.

The bank said that the agriculture sector would contract by 1.1% this year against the growth target of 3.9%. Industrial sector may grow by 2.3% but down from the target of 5.9%. Services sector is projected to grow by 3.2% against the target of 5.1%.

Pakistan’s economic outlook faces substantial risks from further potential increases in world energy and food prices due to the ongoing Russia-Ukraine conflict and slower global growth due to rising inflation, said the lender.

To manage short-term risks, the government needs to strike a delicate balance between progressing on the required fiscal consolidation and meeting relief and recovery needs, it added.

“Because of the catastrophic floods, there is more urgency to implement reforms for creating fiscal space for reconstruction,” said Najy Benhassine, Country Director of the World Bank.

The bank said that high domestic and external financing needs, ongoing political uncertainties, upcoming elections, and maintaining market confidence would be critical.

“It is very important for the government to show to markets that it has an economic recovery plan,” said Tobias Akhtar Haque, World Bank Lead Economist, adding that it was absolutely critical that the IMF programme remained on track.

Despite the challenging situation, the bank said that it would be critical to maintain a tight monetary policy stance, pursue fiscal consolidation to the extent possible, including through tight targeting and prioritisation of any new expenditures, and proceed with planned structural reforms, including in the energy sector.

 

MRT.abcd

Minister (2k+ posts)
it will go negative growth.
Currently, people are using what they have sent already in RDA accounts.
I don't think any big transfers will happen now.
 

xecutioner

Chief Minister (5k+ posts)
Special thanks to Bajwa and crore commanders.......
As usual using army against Pakistanis... like they did in 1971
 

SharpAsKnife

Minister (2k+ posts)
I have not sent a penny back home since Khan has left the office. Similar news I got from most of my expat colleagues and friends
Also, I closed my RDA and any other accounts I had in Pakistan apart from one which has 500 rupees
 

MRT.abcd

Minister (2k+ posts)
Mine has 5,000 rupees and I am not sending anything to RDA.
People should ask relative in Pakistan to use savings.
 

PakistanFIRST1

Minister (2k+ posts)
ECONOMY IS ALREADY FUCKED (MIDDLED FINGER), SO SEND IT OR DONT SEND IT .

DAMAGE IS AREADY DONE.

GROWTH RATE HAS COME DOWN TO 2% AS PER WORLD BANK.
 
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