Bangladesh experienced a sharp decline in the inflow of remittances sent by migrant workers in the last fiscal year 2016-2017. They remitted nearly US $12.77 billion in the last fiscal year 2016-2017, which is a six-year low.
The amount dropped around 14.5 per cent from the previous financial year 2015-2016. The money sent by expatriate Bangladeshis had been hovering over US $14 billion annually since the fiscal year 2012-2013. It crossed the US $15 billion mark in 2014-2015. Remittances in the last two months of fiscal year 2016-2017 were higher than the previous months, but not enough to push the annual amount up. Due to the Ramadan and Eid-ul-Fitr, remittances received in May and June 2017 went up to US $1.26 billion and US $1.21 billion respectively. The figure dipped below the US $1 billion mark in November and December 2016 and to a five-year low for a single month in February 2017.
The Finance Minister, worried over the falling trend of remittance, has announced a plan to charge no fees from the expatriates for sending money. Earlier in May 2017, inward remittance rose 5 per cent year-on-year, helped by an increased transfer of funds by migrant workers from overseas ahead of the Eid-ul-Fitr. According to data from Bangladesh Bank, migrant workers sent home US $1.27 billion in May 2017, which is highest in the first 11 months of fiscal 2016-2017. The monthly remittance receipts dipped below US $1 billion three times in the fiscal year 2016-2017.
According to Bangladesh Bank data, expatriate Bangladeshis sent a little over US $1.09 billion in April 2017. The amount was around US $1.08 billion in March 2017. In February 2017, Bangladesh received only US $940 million, which was the lowest monthly remittance in five years. After the release of the latest data, a central bank spokesperson expected the remittance to rise more in June 2017, the last month of the fiscal year 2016-2017. He told the media, "We are getting positive results of the central bank's steps to encourage the expatriates to use proper banking channels for remitting money. They are sending more remittance now ahead of the Eid. So the growth in remittance will continue in June (2017)".
Bangladesh Bank's spokesman thinks remittance will grow more once the Finance Minister's announcement of the plan to charge no fees from the expatriates for sending money comes into effect. According to central bank data, migrant workers remitted US $11.55 billion from July to May in fiscal 2016-2017, which is 14.18 per cent less than that of the same period in the last (2015-2016). In the first 10 months - July-April - of the fiscal year 2016-2017, expatriates remitted over US $10.28 billion, which is 16 per cent less than the figure of the corresponding period of the previous financial year.
The World Bank in a recent report said remittances to developing countries declined for the second straight year in 2016. Taking note of the report, Bangladesh Finance Minister said the government has taken measures to increase remittance. He said, "Remittances have dropped in all countries. We are not alone. All our indices other than the one on remittance are doing (well). Raising remittance is our major challenge now".
Money sent by the expatriates contributes 12 per cent of Bangladesh's Gross Domestic Product (GDP). Central bank officials are also worried over the drop in remittance. They recently held meetings with the banks over the matter. A central bank delegation has also visited Singapore and Malaysia to understand the situation.
The finance minister has cited weakening economies of the Middle-Eastern countries as the main reason behind the fall in remittance. Devaluation of taka against the dollar and illegal means of sending money are also being blamed for the drop. A major portion of the money sent by Bangladeshi expatriates comes from the Middle East. The economies of the countries there are weakening. Oil price has not increased much, causing budget deficit for them. That is why, incomes of the workers there have dropped. Many have lost jobs. According to a Wall Street Journal report, the International Monetary Fund (IMF) said that the sharing of oil wealth through government jobs and lavish subsidies is no longer sustainable for Saudi Arabia and its neighbours in the Middle East. The IMF has lowered its growth forecast for Saudi Arabia for next year 2018 in April 2017.
Bangladesh receives most remittances from six Middle-East countries. They are Saudi Arabia, United Arab Emirates, Qatar, Oman, Kuwait and Bahrain. Economists at the Bangladesh Institute of Development Studies (BIDS) said that Bangladesh is receiving less money from workers in the UK, EU countries, Malaysia and Singapore than what it used to receive before because of the devaluation of British Pound, Euro, Malaysian Ringgit and Singaporean Dollar against the US Dollar. Expatriates' Welfare and Overseas Employment Ministry has blamed informal channels to transfer money for the drop. It said that many send money from abroad through Hundi for more profit. That is why, remittance is falling. The Hundi business is booming now.
Under the circumstance, all we can look up to is government's initiatives to bring expatriates' remittances under the fold of official channels.
The writer is a retired Professor of Economics, BCS General Education Cadre.