ISLAMABAD: Prime Minister Imran Khan on Thursday launched investment certificates for overseas Pakistanis to boost the country’s foreign exchange reserves, stabilize its currency, and help revive the fragile economy.
“We are giving an opportunity to our overseas nationals to bring dollars to Pakistan and help the country,” he said while addressing the inauguration ceremony of the Naya Pakistan Certificates scheme in Islamabad.
Khan’s government has been struggling for the last two years to curtail the current account deficit by attracting maximum remittances from around nine million overseas nationals and boosting the exports to avert a balance-of-payments crisis.
According to the State Bank of Pakistan, the country had $19.9 billion of reserves last week, including $7.16 billion belonging to commercial banks.
The country has to repay about $4.4 billion on account of foreign commercial loans in the coming months of the current fiscal year, forcing the government to raise funds through bonds and investment certificates to maintain Pakistan's current foreign exchange level.
The newly launched certificates offer conventional and Shariah-compliant options, and they can be financially beneficial not only to the non-resident Pakistanis but also those nationals who reside in the country and have declared their assets abroad.
The scheme allows the eligible investors to park their savings in the new certificates in US dollars and Pak rupees for a flexible tenure starting from three months to five years.
The minimum investment in dollar-denominated certificates is $5,000 with no maximum limit, while those investing in Pak rupees can participate in the scheme by paying a minimum amount of Rs100,000, which can be increased by integral multiples of Rs10,000.
People who make the investment in US dollars will get up to seven percent return while those who pay for the certificates in Pak rupees will get 11 percent.
The scheme also allows early encashment with 10 percent withholding tax on the profit.
“The overseas Pakistanis cannot only earn lucrative profit on their investments, but also help in the country’s development,” said the prime minister while claiming that all economic indicators, except for food inflation, were positive.
The non-resident Pakistanis can invest in the certificates through the Roshan Digital Account scheme that was launched last September. The initiative allows the expatriates to remotely open bank accounts in their country without visiting a bank branch, and invest in different sectors, including the real estate.
Economists recognize that the government has offered lucrative returns to overseas Pakistanis, though they also remain skeptical that this will have a major impact on the revival of the country’s economy.
“The interest rates being offered on Naya Pakistan certificates are very lucrative and it is likely to invite reasonable investment which will help the country’s overall reserves,” Syed Atif Zafar, chief economist and director research at the Topline Securities Limited in Karachi, told Arab News.
However, he said that the government may raise $500 million to $1 billion through the certificates, adding that “this will not be a game changer for Pakistan’s economy.”