Globally, remittance to Bangladesh is facing strong headwinds. The inward remittance flow that spurred the economy for over two decades has dropped distinctively into the negative in recent months. Particularly in November the amount of greenback remitted by Bangladeshis living abroad was USD950 million, which is the lowest in five years. The last time Bangladesh witnessed monthly remittance inflow of less than USD1 billion was in November 2011.
According to Bangladesh Bank, around 10 million Bangladeshis living overseas remitted home USD5.20 billion in the first five months (July- November) of the current 2016-17 fiscal year. The figure for the same period last year was USD6.17 billion, which means it decreased by 15.72 percent year-on-year. The decline in oil price has cut into the income of migrant workers in Middle Eastern countries. Besides, devaluation of several foreign currencies including British pound and euro contributed to the fall in remittance. Observers also blamed illegal channels to send money home like hundi for taking the wind out of the sail of remittance inflow.
Former finance adviser to the immediate past caretaker government, AB Mirza Azizul Islam, said, “A lot of people are going abroad, but we do not know how many of them are coming back or keeping connection with their roots. It seems that the number of people settling abroad permanently is on the rise. So they stopped sending money to their home country.” Besides, the global oil price slump was a reason behind the downtrend in remittance inflow, as the lion’s share of Bangladesh’s remittance earning comes from the Middle Eastern countries which are most hit by oil price movement, he said.
This correspondent recently met with Daud Ahmed from Feni who has been living in Saudi Arabia for 10 years, and recently came home. He said, “Migrant workers in the Kingdom are really passing through a tough time. Many have lost their jobs, while others are facing a steep fall in their income. On top of that, prices of essential commodities and the living costs have gone sky high.” AB Mirza Azizul said that the expatriates were using illegal channels due to stricter rules and regulations in legal ways of sending money to their near and dear ones. The central bank only counts the money remitted through banks and other legal channels; it does not take into account the money transferred illegally.
“The drop in remittance is a challenge for the country’s economy. If the fall prolongs, the country’s GDP will be affected,” he added. Inflow Inching Down Falling oil price, devaluation of British pound and euro and illegal channels have significantly brought down inward remittance Last November, the Bangladeshis working abroad sent the lowest amount of remittance in five years The chief economist at Bangladesh Bank, Birupakkha Pal, said, “There is a big difference between the market price of dollar and its official selling price. Cancellation of Indian rupee triggered a higher demand for dollars and shot up its market price. Capitalizing on the shortage of Indian rupee traders are looking to destabilize the dollar market. Also the ongoing tourist season added pressure on the US dollar.”
The rise in the value of dollar affected remittance flow from Europe and some other countries as expatriates need to convert the currencies they earn to dollar before sending them to their relatives at home. Their incomes dipped in terms of value as now they have to buy dollar at a higher rate. The central bank observed that there is a crisis of cash dollars, which is why the difference between market price and official price of dollar is rising. At present one dollar is sold at BDT80 in banks, whereas the same dollar costs BDT84 in the open market. Similarly, the expatriates are getting two different kinds of offers while remitting money home. In such situations many of them avoid banks in the hope of getting more money. The problem can be solved by importing cash dollars.
The observation of Bangladesh Bank also pointed out that NRBs (Non Resident Bangladeshis) from Singapore, Malaysia, Saudi Arabia and some other countries are sending money through a channel they call b-Kash. But the b-Kash authorities say they have no such service in foreign countries. Therefore a lot of money is coming through illegal channels. Against this backdrop, Bangladesh Bank recently called a meeting of the chief executives of banks and asked them to ratchet up remittance inflow through the banking channel.