Influx of funds: Monday, the layoffs bring it down

ByRichard C. Sloan

Oct 30, 2021

“Declining remittances through formal channels will put pressure on the government’s foreign exchange reserves and exchange rate. Since remittances are critical to government, there is cause for concern.

Prof Selim Raihan, Executive Director of the South Asian Economic Modeling Network

The worrying drop in remittances in recent months is the result of a reappearance of illegal money transfer channels after coronavirus restrictions were lifted, a sharp drop in overseas recruitment and layoffs, they said. said experts.

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From July to September, the country received about $ 5.4 billion through formal channels, up from about $ 6.7 billion during the same period last year, according to data from the Bangladesh Bank (BB ).

Bangladeshis in Saudi Arabia, the United Arab Emirates and Malaysia – the countries from which most remittances originate – sent home about $ 932.7 million less than the amount they sent home. during those three months last year, according to BB and the Bureau of Manpower, Employment and Training (BMET).

In addition, Bangladesh received $ 771.6 million less in remittances in the first quarter of fiscal year 2021-2022 compared to the previous quarter, according to data from BB.

Remittances have skyrocketed in the past fiscal year, even as the pandemic wreaked havoc on the global economy. Expats sent home a record $ 24.7 billion contributing to the country’s economic recovery.

Professor Selim Raihan, executive director of the South Asian Economic Modeling Network (SANEM), said the increase in remittances amid the pandemic had surprised many.

“What happened was that the cash flow took place through formal channels, as informal channels like hundi could not function due to travel restrictions and the closure of economies in different countries.” , did he declare.

But informal channels reopened once restrictions were lifted. “As a result, formal channels are in decline.”

In the past year or so, many workers have been unable to travel abroad and this has left a “cumulative effect” on remittances, he added.

Professor Mustafizur Rahman, a distinguished member of the Center for Policy Dialogue (CPD), said many expats have sent their savings home or returned home with them. But it was a one-off phenomenon.

In addition, there are now fewer overseas employment opportunities for migrants, he said.

In 2020, the number of new workers with overseas jobs was 2.17 lakh, up from 7 lakh in 2019, according to BMET data.

STRONG DROP

Bangladeshi expatriates in Malaysia sent home about $ 607.24 million in funds in July-September 2020. The amount fell to $ 290.85 million this year, marking a drop of $ 316.39 million on a sliding scale. annual.

From Saudi Arabia, migrants sent more than $ 1.6 billion in the first quarter of the previous fiscal year while they sent $ 1.3 billion in the same period this year.

Remittances from the UAE stood at $ 752.47 million between July and September last year. But it was $ 446.17 million this year.

Remittances from the UK and Kuwait were down $ 64.18 million and $ 24.33 million year-on-year.

Shariful Islam, who sells mobile accessories in Kuala Lumpur, said he sent 100 ringgits to his home via a bank on October 4.

“I paid five ringgits in service charges when the exchange rate was Tk 20.35,” he told the Daily Star by telephone. “But you can get at least one more taka for each ringgit if you send money through Monday. Plus, they don’t charge a service charge.”

As of July 2019, the government has provided a 2% cash incentive on amounts sent from abroad. The state-run Agrani Bank Limited granted an additional 1% incentive, but stopped the service in September this year.

Shariful said many of her Bangladeshi colleagues sent money through Agrani Bank when it offered an additional incentive.

Mohammad Musa, a Bangladeshi trader in Ras Al Khaimah, United Arab Emirates, said many of his compatriots were facing job losses and could not send anything home.

REASON TO BE CONCERNED

“The decline in remittances through formal channels will put pressure on the government’s foreign exchange reserves and the exchange rate. Since remittances are crucial for the government, there is cause for concern.” , said Professor Raihan.

Prof Mustafizur said there should be tighter central bank oversight to discourage informal channels.

In addition, the government must keep the exchange rate stable, he added.

Mohammad Shams-Ul Islam, managing director and CEO of Agrani Bank, said the recent decline is temporary and will be short-lived.

He added that the government was considering granting a three percent incentive on amounts paid to Bangladesh.

To encourage senders, Agrani Bank introduced an app-based service to send money from Singapore, he added.

Speaking at a cabinet committee meeting on economic affairs on October 6, Finance Minister AHM Mustafa Kamal said he hoped the flow of remittances would return to normal in about three months, as many Bangladeshis who returned home amid the pandemic are now returning.


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