With the economy under great strain, as seen by depleted foreign reserves, a rising current account deficit, and the currency plunging to a historic low, Pakistan must act quickly to reactivate the International Monetary Fund programme in order to avert a Sri Lanka-style collapse.
“In order to re-enter the program, the government must reduce petroleum and energy subsidies as soon as possible, as agreed with the IMF,” Tahir Abbas, Head of Research at Arif Habib Limited, stated.
Launched in September 2020 amid the COVID-19 pandemic, Roshan Digital Account (RDA) inflows crossed $4 billion, reaching $4.2 billion in April 2022. Inflows clocked in at $245 million during April.
“If Roshan Digital Accounts were not launched, Pakistan’s foreign exchange reserves would have been in a highly critical stage,” seasoned economic journalist Salman Siddiqui said.
Without RDA and the support from Saudi Arabia and China, “We would have a crisis situation as the country may have moved towards bankruptcy just like Sri Lanka,” Siddiqui said. Pakistan has managed to dodge bankruptcy in the past by borrowing from friendly nations, agreeing to IMF terms or issuing bonds, he added.