KARACHI: The government has increased the rates of returns on Naya Pakistan Certificates (NPCs) after most investments in these certificates have been withdrawn in the past nine months amid political unrest.

According to a notification issued by the Ministry of Finance on Friday, the returns on NPCs have been increased by up to 150 basis points (bps) for different tenors.

The US dollar investments will now get a 7pc return on three-month papers against 5.5pc returns being offered earlier. The rate has been increased by 120 bps to 7.2pc for six months, and by 100 bps to 7.5pc for 12 months.

The three- and five-years papers will both now get 8pc return compared to 6.75pc and 7pc previously.

The profits on investments in the British pound have been increased by up to 125 bps.

The returns on three-, six- and 12-month papers have been increased to 5.5pc, 6pc and 7pc, respectively. The three-year and five-year papers now equally offer 7.5pc returns compared to 6.25pc and 6.5pc, respectively.

In contrast, euro returns have been slashed by the government by 75 bps to 4pc for three-month papers, by 50 bps to 4.5pc for six months, and by 25 bps to 5pc for 12 months.

Surprisingly, the government kept the returns unchanged for rupee investments at 15pc for three months, 15.25pc for six months, 15.5pc for 12 months, 14pc for three years, and 13.5pc for five years.

The NPC was launched in 2020 to attract foreign investment and succeeded in attracting over $4 billion, but most investments were withdrawn during the political turmoil that began after a change of government in April last year.

Financial experts believe that an increase in returns on dollar investments would not work unless economic and political stability returned to the country.

In NPCs, only a 10pc withholding tax on profits is applicable, and there is no requirement for filing tax returns. In addition, resident Pakistanis who have assets abroad declared with the Federal Board of Revenue can also invest in dollar-, pound- and euro-denominated certificates.

Published in Dawn, January 21st, 2023