Bangladesh sees July-April remittance drop 16% after April rise

Bangladesh has received 16 percent less remittance from July to April in the current fiscal year than it did in the same period last fiscal.

The drop followed a rise in April from the March figures.

The downtrend in the inflow of remittance has left Finance Minister AMA Muhith worried.

According to Bangladesh Bank data released on Wednesday, expatriate Bangladeshis sent a little over $1.09 billion in April. The amount was around $1.08 billion in March.

In February, Bangladesh received only $940 million, which was the lowest monthly remittance in five years.

In the first 10 months (July-April) of the current fiscal, the expatriates remitted over $10.28 billion, which is 16 percent less than $12.25 billion than the figure from the same 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 notice of the report, Finance Minister Muhith said the government had taken measures to increase remittance.

"Remittances have dropped in all the countries. We are not alone. All our indices other than the one on remittance are doing good. Raising remittance is our major challenge now," he said.

Money sent by the expatriates contributes to 12 percent of Bangladesh's GDP.

 

Central bank officials are also worried over the drop in remittance. They have recently held meetings with the banks over the matter.

A central bank delegation has also visited Singapore and Malaysia to understand the situation.

Why the plunge?

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 risen much, causing budget deficit for them.

"That's why the income of the workers there has dropped. Many have lost job," Muhith said.

The Wall Street Journal reported on Tuesday that the International Monetary Fund said 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 in April.

Bangladesh receives most remittances from six Middle-East countries -- Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait and Bahrain.

The Bangladesh Institute of Development Studies (BIDS) researcher Zaid Bakht said Bangladesh is receiving less money from workers in the UK, Europe, Malaysia, and Singapore that what it used to before because of the devaluation of British pound, euro, Malaysian ringgit and Singaporean dollar against US dollar.

Expatriates' Welfare and Overseas Employment Minister Nurul Islam BSc has blamed the drop on informal channels to transfer money like 'Hundi'.

"Many send money from abroad through Hundi for more profit. That's why remittance is falling. The Hundi business is booming now," he said.

Remittance averaged more than $1 billion a month for past few years but started to drop in November last year. It crossed the $1 billion monthly mark in January again.

Bangladesh saw the downward trend for the first time in 2013. The expatriates sent $13.83 billion that year, a 2.39 percent drop from 2012.

The flow of remittance grew by 7.88 percent in 2014. The amount was $14.92 billion that year. The remittance flow grew again in 2015; by 2.68 percent.

But it dropped in 2016 when the expatriates sent home $13.61 million, which is 11.16 percent less than $15.32 billion of 2015.