Bangladesh has received a jolt in earnings from remittances from abroad. It is not one-off decline, rather a continuing downtrend which is concerning. Last February wage earners' remittances stood at $936 million representing 17.6 per cent decline from the level of corresponding period in the last fiscal. The February figure is the lowest since November, 2011 when the country had received $900 million.
Actually, in 2016 -17, remittance receipts decreased every month compared to the same period a year ago.
Remittances are the country's second largest foreign exchange earner next to garments. That too without any investment comparable to anywhere near what the RMG sector involves-- in terms of local value addition for apparel export.
At any rate, what needs to be noted is that the decline is impacting negatively on the current account balance and eroding balance of payments. According to the central bank data, the current account balance turned negative by $726 million and the trade deficit widened to $3.88 billion during July-November period.
Mirza Mohammad Azizul Islam ,economist and former adviser to caretaker government has given his perspective in the following way: "A large part of the remittances comes from the Middle East. The economies of the region have weakened through falling oil prices over time, budget deficits have grown and desperate fiscal consolidation efforts have got underway. Consequently, wage earners' incomes have shrunk; several may have clung to their jobs with reduced salaries ; some may have lost their jobs altogether. What's more, the demand for jobs is decreasing there. So remittances have slumped.
But Mirza Aziz holds the view resonating with most observers that the official remittance figures may fall far short of the actual inflow, much of it being routed through 'Hundi'. The open market value of dollar is enticingly higher than the official rate, so that overseas workers fall for the unofficial, illegal channels.
A case in point is the penalisation of 25 Bangladeshi shop-keepers in Dubai only last month on the ground that they had sent money out through illegal means. Such shops, it was alleged , were using a mobile Apps called 'Bikash' to remit money to Bangladesh at a low cost. It is as well that host countries are discouraging illicit money transfers and trying to prevent them at the root.
However, responsibility devolves on the part of the country, more precisely, on Bangladesh Bank, to incentivise money transfers from abroad by cutting on time and costs of operating the service through banks. Also effective rate of exchange may have to be offered having regard to volume of inflows. Simultaneously, the government will have to undertake promotional programmes targeted at potential remitters. These will be to sensitise them against dangers money-laundering poses to national economy as well as personal risks they are taking on them.
Zahid Husain , lead economist of the World Bank, Dhaka office adds a new angle to remittances taking a tumble. He maintained in January that the fall in remittance inflow 'is not just because of the depressing effects of low oil prices on incomes and employment in the oil-exporting countries.' 'Since July last year', he added, remittances have declined very significantly from the USA and the UK as well.'
"The rising trend of remitting money through informal channels and the uncertainties caused by the unexpected Brexit and the US election results might have affected the remittance flow," according to the World Bank, Dhaka office economist.
His prognosis , insofar as the Gulf countries' 'sharper fiscal consolidation' goes, is that we have to brace up to a 'sharply' slower remittance flows.
Mitsuhiro Furusawa, deputy managing director of the IMF on a recent visit to Dhaka underlined that the 'weakening of remittance is a new challenge for Bangladesh.'
It is high time the country explored newer pastures for manpower export based on skill training oriented to potential or real demands in continents beyond Asia, Europe and North America. As a land-short country, it has to think out of the box and explore new frontiers of opportunities topped up by a built-in negotiating capacity to cut good deals. At the end of the day, the diplomatic missions abroad will have to prove equal to the task.
- Saturday, 23 November 2024 |
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