Eyeing NRP funds.

The lingering political chaos and deepening economic crisis in Pakistan have reached a point where everyone with stakes here has been pondering over options to break out of the quagmire defined by falling reserves, energy shortages, hiking inflation and a shrinking economy.

Moin Fudda is the chairman of the board of directors of the Central Depository Company and the former managing director of the Pakistan Stock Exchange. In a recent conversation, he suggested launching a real estate dollar investment scheme for non-resident Pakistanis (NRP) to ease the mounting pressure on dangerously low forex reserves and insufficient resources to support flood affectees.

According to the State Bank data released last Friday, the net foreign exchange reserves of the SBP depleted to $5.58 billion on 30th December 2022, down by $245 million from a week earlier. The net reserves with banks clock at $5.85bn, which adds to total liquid reserves at $11.43bn. The SBP net reserves over the course of the tumultuous 2022 shrunk to about one-third by the close of the year to what it was at the start. In January 2022, SBP reserves were $16.6bn.

The average monthly import bill of Pakistan is over $6bn. The current reserves are scarcely sufficient to fund imports for barely 28 days.

An idea for a real estate dollar investment scheme for non-resident Pakistanis seems unviable given the trust deficit

Besides the actual precarious situation (falling exports, remittances and delay in disbursement of funds by bilateral and multilateral donors while the country desperately needs the hard currency to fund necessary imports, meet private demand, service debt and rehabilitate people/infrastructure destroyed in floods) the perception of inching towards default has played the market.

The growing gap between the interbank and open market rates (interbank exchange rate is in the vicinity of Rs225 against Rs235 and above to a dollar in the open market) has been aggravating the problem as overseas remitters switch to informal channels for money transfers.

'The government should open the real estate sector in Karachi, Lahore and Islamabad for overseas Pakistanis to strengthen dollar inflows, support reserves and fund schemes to rehabilitate flood-affected masses in Sindh and Balochistan', Mr Fudda floated an idea.

'If it is for flood relief and if the military establishment assumes the responsibility of fund management, I suppose it will inspire confidence in overseas investors and...