KARACHI: The governor of Pakistan’s central bank on Thursday reiterated the country’s commitment to honor its international debt obligations, saying that after receiving inflows of $1.5 billion from the Asian Development Bank (ADB), Pakistan expected to receive more which would help in “meeting foreign debt obligations.”

Cash-strapped Pakistan on Wednesday received much-needed inflows of $1.5 billion from the ADB under the Building Resilience Under Active Countercyclical Expenditure (BRACE) program. BRACE funds are allocated to help Pakistan recover from the impact of cataclysmic floods which have killed over 1,700 in the country since June 14.

“Yesterday we have received $1.5 billion [from the] Asian Development Bank while additional inflows from some other multilaterals and bilaterals, including the Asian Infrastructure Investment Bank (AIIB) are expected soon,” Jameel Ahmad, Governor of the State Bank of Pakistan (SBP) said.

He was speaking at the Gong Ceremony held at the Pakistan Stock Exchange (PSX). The event was held to mark the launch of the Roshan Equity Investment (REI), a product offered to non-resident Pakistanis under the umbrella of the Roshan Digital Accounts (RDA).

“These inflows will not only help meet our debt obligations but also improve our forex exchange reserves,” Ahmad said. “Let me assure you that we will be meeting all our foreign debt obligation on time and there should be no concern about that.”  

Pakistan’s risk of defaulting on its international obligations, measured by the five-year Credit Default Swap (CDS) increased to a 13-year high on Tuesday, signaling a loss of trust among foreign investors in Pakistan’s ability to pay off its debt.  

The CDS spike to 52.8% comes at a time when the third Pakistan International Sukuk is to be matured later this year, on December 5, and the country has to pay around $1 billion to international investors.    

Inflows from the ADB have improved market sentiments but Pakistan’s national currency remains under pressure mainly due to the high demand of the US dollar for import payments.  

“The rupee is under pressure mainly due to rising demand from importers amid a shortage of inflows from exporters and other sources,” Samiullah Tariq, Director Research at Pakistan Kuwait Investment Company, told Arab News.

“The government is expected to utilized ADB inflows to meet its international obligation at the end of the current year,” he added.

However, the inflows have increased Pakistan’s forex reserves, which have risen to $9 billion from $7.4 billion, according to the central bank.

Speaking about the initiative, the SBP governor said that RDA has provided an opportunity for non-resident Pakistanis to connect with the domestic banking system and has proved to be instrumental in attracting foreign exchange inflows of over $5.2 billion.

This, he said, was due to RDA’s ease of operability, fund repatriation and the return offered on investment.

“Over 484,000 RDAs have been opened by overseas Pakistanis from 175 countries with total inflows of around $5.28 billion,” Ahmad said.  

“The formal launch of the REI comes at an opportune time for investors [given the] recent positive development [of the] combined 7th and 8th review under the IMF (International Monetary Fund) program which was completed on August 29,” he added.

REI is an innovative product whereby non-resident Pakistanis can invest in Pakistan’s stock market conveniently, swiftly and digitally. REI account allows investors the benefit of investing in the local stock market similar to availing facilities such as car financing, house financing and the purchase of government bonds through their RDAs.  

Dr. Shamshad Akhtar, the PSX chairman, said the REI was an important demand of overseas Pakistanis, who desired convenience in investing in their home country’s stock market.

“The Roshan Equity Investment facility for Roshan Digital Account holders is an excellent opportunity to benefit not only non-resident Pakistanis themselves but also the economy of Pakistan by way of routing the much-needed foreign exchange into the country,” she said.

Badiuddin Akber, the CEO of the Central Depository Company (CDC) of Pakistan, in his presentation, said the CDC was offering complete digital settlement services to more than 10,000 RDA holders around the globe.