AFTER a long time, a really attractive scheme has been launched to provide incentive to overseas Pakistanis to invest their hard-earned money back home for their own benefit and that of the country. Prime Minister Imran Khan, on Thursday, launched State Bank of Pakistan’s Naya Pakistan Certificates that will give up to 7% return in US Dollars and 11% in Pakistani Rupees. According to the scheme, Pakistanis living abroad as well as resident Pakistanis who have declared their foreign assets to the Federal Board of Revenue (FBR), are eligible to buy the certificates.
Overseas Pakistanis have the potential to contribute enough to help resolve most of the financial woes of the country and with this in view successive governments have been introducing schemes aimed at motivating them to send remittances back home through official channels and invest their savings in profitable ventures in different sectors of the national economy. No doubt, these schemes achieved various degrees of success but experts believed there was much more potential for exploiting this resource for national development. The PTI Government deserves credit for introducing several measures directed towards that end including improvement in Pakistan’s foreign exchange market structure and its dynamics as well as efforts under the Pakistan Remittances Initiative (PRI) to formalize the flows, which have started paying dividends. As per latest data of SBP, inflows of workers’ remittances remained over $ 2 billion for the fifth consecutive month in October 2020. Overseas Pakistanis remitted some $ 9.431 billion during July-October of FY21 compared to $7.454 billion in the same period of last fiscal year (FY20), depicting an increase of $1.977 billion. The significant increase is encouraging as it comes in the wake of problems being encountered by Overseas Pakistanis due to Covid-19 related world-wide recession and resultant dismissals and drop in income. It is mainly because of rising remittances and curbs on unnecessary imports that the country was able to post current account surplus, an achievement which was otherwise considered unrealizable in the past.
Given the extraordinary high rate of interest being offered on the Naya Pakistan Certificates, the scheme is destined to help the Government raise significant money at a time when foreign exchange reserves are dwindling for a variety of reasons and the authorities were desperate to find ways and means to finance the deficit. The Prime Minister has rightly observed that once people start bringing in their dollars to Pakistan, they will not only benefit from the scheme themselves but it would also help Pakistan stabilize its economy. Accumulation of foreign exchange this way would necessarily mean an increase in foreign exchange reserves of the country and this would also help stabilize the rupee, which has already started improving against the dollar. The prevailing price-hike has also been triggered by wholesale devaluation of rupee and a strong currency would mean stability in prices as well. However, it is also being pointed out that if the scheme is not accompanied by plans to address structural flaws of the economy, it might lead to further increase in the burden of debt on the country. We also hope that deposits under Naya Pakistan Certificates would not be used by the Government merely to finance budget deficit but on projects that help accelerate the pace of economic growth and add to the national income. Foreign exchange should, therefore, be used for development of critically important communications, roads, power generation and transmission infrastructure and investment in human development as also envisaged in PSDP so that it boosts our economic growth.
