The declining trend in overseas employment has started impacting the flow of inbound remittances in the country. The flow of remittances has been gradually going down since the beginning of the current fiscal year. In the first quarter of the current 2013-14 fiscal, the total remittances recorded a fall of 8 per cent over the same period last year. The expatriate Bangladeshis sent a total of USD 3.27 billion as remittances home in the July-September period in the current fiscal against a flow of USD 3.56 billion during the same period last fiscal. The declining trend started in July this year. Economists sounded a note of caution about the negative impact of lower flow of remittances into the country. They said the decline in the flow of remittances would disturb macroeconomic management as the remittances have become the backbone of the economy. This would also have a negative impact on the overall balance of payments situation, they warned.
“If the declining trend in the flow of remittances continues for a long period of time, it would cause disaster to our overall economy,” said Prof Abu Ahamed of the economics department of Dhaka University.
“This is because remittances are the main support for our economy, serving the function which was earlier served by foreign aid,” he pointed out. “Dwindling remittances for a long period of time can make the balance of payments negative,” he added.
Ahamed suggested developing relationships with Muslim countries, which are the main sources of remittances. “The foreign ministry should take action to ensure that the flow of remittances and overseas employment are not affected. These two things are very important for the economy of Bangladesh,” he observed.
Former Bangladesh Bank governor Dr Salehuddin Ahmed, however, said the declining flow of remittances may have a negative impact on the consumer market and real estate sector as demand would fall, since there will be lower amounts of money in the hands of people. Otherwise, the overall impact on the economy would not be very significant, he said, as the current account balance is still in a good position. “Imports are not rising. If the imports rise significantly, then it may reduce the existing surplus at the balance of payments,” he pointed out.
He observed that the flow may have declined as expatriate Bangladeshis might be holding on to their money due to the strong position of local currency vis-à-vis the dollar. He expressed his hope that the flow may increase ahead of Eid-ul Azha.
According to sources, the declining trend in the flow of remittances was the outcome of shrinking overseas employment. Overseas employment declined by 45 per cent in the first half of the current year.
Overseas employment from the country has posted a sharp decline this year compared to last year. In the first half of the current year, the number of people going abroad for jobs declined by 45 per cent, compared to the figures in the corresponding period last year.
The total number of people going abroad for jobs is 1.66 lakh less in the first six months this year than the number during the same period last year, according to the Bureau of Manpower, Employment and Training (BMET), the lone government agency which monitors overseas employment-related issues.
According to the BMET, a total of 2.08 lakh Bangladeshis went abroad for jobs from January to June. The number was 3.74 lakh during the same period last year. The declining trend also continued in the months of July, August and September.
Expatriate welfare and overseas employment minister Khondker Mosharraf Hossein refused to admit that the flow of remittances has been affected by the declining trend in overseas employment. “We have doubled the flow of remittances in the last five years,” he claimed, saying that the yearly earnings from remittances reached USD 15.5 billion recently from a mere USD 7-8 billion just five years ago.
In a recent report, the World Bank, however, projected that the country would receive the highest amount of remittances this year. According to the bank, the flow of remittances would reach USD 15 billion at the end of the year.
According to the bank, Bangladesh ranked seventh in the list of 10 countries expected to receive highest officially recorded remittances in 2013. The World Bank’s ‘Migration and Development Brief’ on global migration and remittances projected that the developing world would receive USD 414 billion in migrant remittances in 2013, a 6.3 per cent increase over the previous year. The amount is projected to rise to USD 540 billion by 2016.
The WB listed Bangladesh among the four countries whose remittances are larger than the national foreign exchange reserves. Among the countries receiving remittances worldwide, India topped the list, getting USD 71 billion, followed by China, which received USD 60 billion as remittances.
The flow of remittances into the country has been posting a rising trend over the years. It doubled in the last five-year period since the present government came to power. Five years ago, during the 2007-8 fiscal, the total flow of remittances into the country was USD 7.9 billion. The country received USD 13.07 billion in the 2011-12 fiscal and USD 10.36 billion in the 2010-11 fiscal.
Courtesy of The Independent
