Govt should design plan to manage $100 b loan

Mahfuz Emran: The government listens to the IMF with a loan of less than $5 billion, while the diaspora, which has provided hundreds of billions of dollars in the last five fiscal years, has no value.
The government is taking a loan of $4.70 billion from the International Monetary Fund (IMF) to deal with the foreign exchange pressure. The last installment of this loan scheme which started in 2023 will be released in 2026. More than a dozen conditions have been accepted by the multinational to get the loan, which is discounted in seven installments. Among them, there are difficult conditions such as market-based loan interest rate, leaving the dollar exchange rate to the market, record devaluation of the currency, financial sector reform, fuel oil, electricity, gas price increase, and structural changes in the budget.
In the first 10 months of the current fiscal year, expatriates sent remittances to the country through banking channels to the tune of more than $19 billion, which is several times the total amount of the IMF loan package.
In total, from June 2019 to April this year, in less than five years, expatriates sent about $105 billion to the country. The country’s economy survives in this sense of expatriates sent as remittances. But the diaspora, which provides so much foreign exchange, has no role in formulating government policies. Expatriates are victims of mismanagement, bribery, irregularities and corruption even in getting their rightful rights. This time, the government is also thinking of taxing remittances on the advice of the IMF.
Economists say that the economy of Bangladesh depends on remittances sent by expatriates. If remittance is stopped for one year, the country’s economy will be in serious danger. Despite such contributions, expatriates are not getting the respect and dignity they deserve. On the contrary, expatriates are being harassed from all the institutions of the state. Expatriates are also deprived of voting rights due to being outside the country.
If remittances stop coming for a year, the entire economy of Bangladesh will collapse, economist Wahiduddin Mahmud said. He said, “Many people ask, how is the economy of Bangladesh surviving despite so much irregularities, corruption and wastage?” I say, the economy of this country is still alive only because of remittances sent by expatriates. Any income has to be invested. But remittances are the only income for which the country has no investment. Rather, if these Bangladeshis were not immigrants, the economy and labor force would have been in dire straits due to the pressure of unemployment. Apart from India, Bangladesh is the only country whose people can be found in all corners of the world. Bangladeshis are successful in doing business in different countries of the world. That means, if given a little good governance and opportunity, Bangladeshis can be successful in any field.
Wahiduddin Mahmud said, “From the businessmen of the country, there are organizations of people of all classes and professions. I have not heard of any such organization only for expatriate rights. If expatriates are united and aware of their rights, the country’s government will give more importance to expatriates than the IMF or any other force. Now I hear that the government will impose tax on remittances. I don’t understand how this is possible. The workplace of expatriates is beyond the jurisdiction of the Bangladesh government.
According to Bangladesh Bureau of Manpower, Employment and Training (BMET), more than one and a half million Bangladeshis have migrated since independence. However, a significant number of workers have returned to the country. Right now, the government agencies do not have accurate statistics on how many workers are abroad. It is estimated that currently around one crore Bangladeshi workers are working in different countries. Out of this only in 2023, 13 lakh 5 thousand 453 Bangladeshis have migrated in search of livelihood. Earlier, the number of Bangladeshi immigrants in 2022 was 11 lakh 35 thousand 873 people. In other words, more than 24 lakh Bangladeshis have gone abroad for work in the last two years. Taking into account the current year, this number stands at 3 million.
According to the data of Bangladesh Bank, in the first 10 months (July-April) of the current fiscal year 2023-24, expatriate Bangladeshis sent $19.18 billion to the country. Earlier, remittances sent by expatriates in the fiscal year 2022-23 were $21.61 billion. In the financial year 2021-22, $21.03 billion and in 2020-21 financial year, a record $24.78 billion remittances came to the country. And in the financial year 2019-20, the amount of remittances to the country was $18.21 billion. In other words, only from June 2019 to April this year, in less than five years, expatriate Bangladeshis have sent $104.81 billion remittance to the country.
Remittances sent by expatriates are added to the country’s balance of payments (BOP). Bangladesh is in danger with BOP for the last three years. The BoP deficit was $4.75 billion as of March of the current fiscal year. This deficit was more than $8.48 billion till the same period of the last financial year. Due to this shortage of BOP, the country’s foreign exchange reserves are continuously depleting. Gross reserves have now fallen to $18 billion from a record $48 billion in August 2021.
Bangladesh approached the IMF because of the crisis in foreign trade. Debenture with this loan started in 2022. On January 30, 2023, the organization’s executive board meeting approved a loan proposal of $4.7 billion for Bangladesh. Bangladesh will get this loan in 42 months in seven installments. Average loan interest rate is 2.2 percent. During the loan program till 2026, Bangladesh will have to implement various conditions and reform programs. Bangladesh received $476 million in the first installment of the loan from the IMF in February last year and $689.8 million in the second installment in December last year. The third tranche of $115.2 million is awaiting approval from the agency’s board.
The government has accepted more than a dozen conditions to get a loan of less than $5 billion from the IMF. This includes drastic measures such as leaving bank loan interest rates up to the market. The loan interest rate has gone up to 15 percent from a peak of 9 percent. And as part of leaving the exchange rate of the dollar to the market, Bangladesh Bank has implemented the ‘crawling peg’ policy. This resulted in a 6.36 percent devaluation of the taka in one day on May 8. The exchange rate rose from Tk 110 to Tk 117 per dollar. The IMF has also included conditions for the government to end subsidies in the power and energy sectors. To implement this condition, the government has announced to increase the price of electricity four times every year. Sources in the National Board of Revenue (NBR) have also said that various types of investments including remittances, IMF government securities, units of mutual funds, publicly listed securities, savings bonds, etc. have been exempted, canceled or reduced.
The government is accepting all the conditions of the IMF against receiving a loan of less than $5 billion. However, despite providing nearly 22 billion dollars every year, expatriates remain neglected and deprived in government policy making. Immigration officials say that it is costing five to six times more to send workers to Malaysia than the fee set by the government. Despite spending so much money, there are many Bangladeshis living inhuman life in Malaysia. But the stakeholders of the country did not seem to express much concern about the matter. Again, many are becoming victims of human trafficking through illegal immigration in various countries including Malaysia. The Malaysian government has taken some measures against those involved in human trafficking in that country. But in Bangladesh it is not visible in that way. There have also been allegations that a syndicate of influential people is involved in sending workers from Bangladesh through irregularities and corruption in Malaysia. Many are immigrating to other countries in an unauthorized-illegal way, risking their lives. Bangladesh is now at the top of the list of source countries for migrants crossing the dangerous Mediterranean Sea to Europe illegally. Many people die every year while trying to immigrate to Europe.
Prof CR Abrar, executive director of the Refugee and Migratory Movement Research Unit (RAMRU), a research institute on migration, feels that the voice of expatriates is very weak. There is no institution strong enough to speak forcefully on their behalf. Because of this, expatriates are deprived in all cases.
CR Abrar said, ‘The main driving force of the country’s economy is remittances. The importance of remittances has come to the fore during the current economic crisis. It will be the responsibility of the government to consider remittance as the most important sector. At the same time ensuring the rights of expatriates. Effective measures should be taken to stop mismanagement, irregularities and corruption in all areas starting from passport issue, visa process, airport. If expatriates are satisfied with the sincerity and service of the government, they will feel encouraged to send remittances through legitimate channels.