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Remittance keeps economy buoyant

Published : 07 Oct 2020 10:08 PM | Updated : 08 Oct 2020 08:29 AM

Remittance, or the money sent home by migrants, has kept the country’s economy afloat amid the coronavirus crisis, experts said.

Despite a massive blow to the economic indicators for the virus, remittance is an exception as it continues showing a record growth to become a backbone for the economy.

The economy sustained strong growth led by record remittances inflow in the last decade, following the government’s timely measures, they added.

Dr. Atiur Rahman, former Bangladesh Bank governor, told Bangladesh Post, “Remittance is the backbone of the country’s economy.”

Expatriate income has recently helped to stay positive on the balance of payment of the country, which was negative for a long time, he informed.

“The higher growth of remittance inflow now is attributed to a budget declaration of 2 percent cash incentive by the government to remitters on inward remittance since the past several months,” he mentioned.

Besides, the central bank has taken several initiatives including providing an easy system giving remittance to remitters as well as buying dollars directly from the market for a stable forex market, which encouraged expatriates to send money through   legal channels including banks, he added.

Atiur said remittances are one of the pillars of the economy. 

The reality is that the impact of remittances on the economy is multidimensional, he said adding that remittance is playing a big role in the whole socio-economic context, especially in rural transformation, starting from the individual to the people. 

“It is possible and necessary to make the contribution of remittances to the economy stronger through proper patronage,” he added.

Atiur said this is the highest monthly remittance received in the country’s history helping push foreign currency reserves up to $39.31 billion that is good news for the country.

He strongly recommended that immediate measures should be taken to look into the problems of all wage-earners abroad facing a crisis amid the covid-19 situation.

Rahman urged the government to address the problems of the foreign wage earners on priority basis in order to keep the flow of the foreign remittance going smoothly.

On the other hand, some expatriates who have tried to go back to their jobs abroad are now facing many hurdles including with Covid-19 test reports and high prices of air tickets, he added.

The government should provide all support to them to return abroad, he mentioned.

Eminent economist Zahid Hussain said remittance has been leading a silent economic revolution in Bangladesh since its independence as it has contributed a lot to make the economy vibrant.

Remittance has also strengthened the country's foreign exchange reserves to a great extent, he said.

Hussain said,“The government should take a new plan for the expatriates to overcome the bad situation and give proper training to create skilled manpower to boost the remittance inflow.”

Market analysts said remittance is the second largest source of foreign exchange after the ready-made garment (RMG) sector. 

Although RMG is the largest source, huge sums of money go out of the country to pay for the raw materials used to make the product, they added. 

In this process, the country has provided almost 44 percent of import payment from export earnings in this sector.

According to NBR data, the RMG sector fetched Bangladesh $34.13 billion in the 2018-19 FY but the export earnings from the industry declined by 18.84 per cent to $ 27.70 billion in the 2019-20 FY.

The central bank’s reviews on RMG sector suggest that value addition of the sector is around 56 percent, meaning the net export from the industry was around $15.50 billion, less than the annual remittance figure.

However, Bangladesh’s remittance inflow registered a 10.85 percent growth in the just concluded 2019-20 fiscal year over the previous FY to hit a record high of $18.20 billion despite the Covid-19-induced ongoing global economic recession and fall in oil prices.

The country’s remittance inflow witnessed a rapid growth to stand at $6.71 billion in the first quarter (Q1) of the current fiscal, up 49 percent compared to that in the same period last fiscal.

This figure was $4.45 billion in Q1 in fiscal year 2019-2020.

Market analysts said expatriates have broken all previous records by sending the amount of money home in the last several months.

The remittance inflow was more than expected, they said adding that experts from home and abroad feared to get less remittance in July due to the Covid-19 pandemic.

An official of Bangladesh Bank (BB) said various time-befitting initiatives taken by the government have resulted in an increased awareness among expatriate workers to send their hard-earned money through legal channels, pushing up the remittance inflow.

This will significantly increase the remittance inflow through legal channels and discourage the ‘hundi’ business, economists said.

Bangladeshi expatriates in various countries sent home $2.15 billion in September this year, posting a 45.64 percent year-on-year growth compared to $1.47 billion remitted in the same month last year.

The country’s remittance inflow increased 35.93 percent to $1.96 billion in August against $1.44 billion in the same period of the previous year amid the coronavirus pandemic.

Expatriates sent a record remittance of $2.60 billion from different foreign countries in July.

The country’s remittance inflow witnessed a record high reaching almost $2.60 billion in July, which for the first time in the history of Bangladesh crossed the remittance inflow to $2.50 billion.

Bangladeshi expatriates sent home $11.65 billion in FY11, $12.84 billion in FY12, $14.46 billion in FY13, $14.23 billion in FY14, $15.31 billion in FY15, $14.93 billion in FY16, $12.77 billion in FY17 and $14.98 billion in FY18 respectively.

More than 1.02 crore Bangladeshi expatriates are currently working in some 174 countries across the world.