Growing concern about remittances

Staff Correspondent: July, the first month of the new financial year 2024-25, started with a high rate of remittances. In the first 13 days, $978.6 million remittances came into the country through legal means. In local currency (Tk 118 per dollar) which amounts to Tk 11,548 crore. At this time, an average of $75.2 million remittances came every day. However, the expatriate income received a big shock in the next week.
In the last six days from July 19 to 24, remittances were only $78 million. That is, the amount of expatriate income that came in one day in the first part of the month, is equal to the amount that came in the last six days. This information was obtained from the updated report of the central bank. Economists say that the sudden decline in remittances is an ominous sign for the country’s economy.
After reviewing the data of the Central Bank, it was found that in the first 13 days of this July, $97.86 million were remitted, $13.67 million through state-owned banks, $5.4 million through a specialized bank, $789 million came through the private banks and $25.40 million remittances came through the foreign banks. Earlier, in June, the last month of the recently concluded financial year 2023-24, remittances came in at $254 million.
Which is the highest remittance in the last three financial years. As a single month which is the highest remittance in 47 months. In the first month of fiscal year 2023-24, July $197 crore 31 lakh, August $159 crore 94 lakh, September $133 crore 43 lakh, October $197 crore 14 lakh, November $193 crore, December $199 crore 12 lakh, January $211 crore 31 lakh, February $216.45 crores, $199 crores 70 lakhs in March, $204 crores 42 lakhs came in April, $225 crores 38 lakhs came in May.
In the recently concluded fiscal year 2023-24, expatriates have sent foreign currency remittances equivalent to $2,392 million to the country. The amount of which is $2 lakh 82 thousand crores in domestic currency. This number of remittances is the second highest ever. The highest record remittance in the country’s history came in the fiscal year 2020-21 at $2,477 million.
And the analysis of the remittance collection data of the last week has shown that the remittance or expatriate income has decreased significantly this week. In the first 18 days of this month, an average of $79 million remittances came every day, but from 19 to 24 July, $78 million came in six days.
However, from last 19th to 24th July, banking activities are going on only for one day. The government has issued a curfew from Friday night on July 19 to control the situation that was created across the country around the student quota reform movement.
After that, the bank was closed till Tuesday. Online transactions of the bank were also closed due to lack of internet connection. The bank opened on July 24 after a few days of transaction closure. On that day, trading lasted for four hours from 11 am to 3 pm. Due to the closure of banking activities, it was not possible for remittances to come into the country through legal channels from July 19 to July 23. During this period, those who sent remittances from abroad were supposed to be deposited in the country’s banks on the first day of bank opening last Wednesday, but that did not happen.
By reviewing the data of Bangladesh Bank, it can be seen that the lowest remittance in the first six months of the current year 2024 came in March. In that month, remittances to the country reached $199.70 crores. Before this, remittances of $211.31 million in January and $216.45 million in February came to the country. In April, expatriate Bangladeshis sent remittances worth $204.42 million. And in May remittance came $225.49 million. Last June, expatriates sent a record $254.16 million in remittances, the highest in the last 47 months. Earlier in July 2020, expatriate Bangladeshis sent the highest remittance of $2598.2 million in the history of the country.
Executive Director and Spokesperson of Bangladesh Bank Majbaul Haque said that remittances of $1.5 billion have arrived in the country till July 24.
However, this calculation may increase slightly. Because the bank was closed for five consecutive days. Banks opened on Wednesday and Thursday but the range of activities was very small. Banks were limited to cash deposits and withdrawals only. Remittance in Nostro account is not fully reconciled. Full accounts of remittances will be available by the end of the month if banking operations are fully normal.
It should be noted that although the export sector is the main source of foreign exchange of the country, the role of remittance in the overall economy is the most effective. According to the data of Bangladesh Bank, the export income of the country in 11 months (July-May) of the fiscal year 2023-24 was $ 37.34 billion. At the same time, expatriates sent remittances of $21.37 billion to the country.
Economists say that at least $30 billion of goods have to be imported from abroad against the export income of $37 billion. In that case, the country’s actual foreign exchange income is only $6-7 billion. But unlike the money that expatriates send from abroad as remittances, there is no cost to the country.
All of the remittances from expatriates are contributing to the increase of reserves in addition to meeting the country’s foreign exchange expenditure.
Eminent economist and executive director of Policy Research Institute Ahsan H Mansoor said that the sudden decrease in remittances is not a good sign for the country’s economy. However, the country has gone through an upheaval in the last week.
Everything, including banks, was closed, so remittances may be less due to this effect. But it is the responsibility of central bank and government to find out whether there is any other reason or not. The decline in remittances should not be taken lightly.
Because the condition of reserves is not good, the export income is also coming less. In this situation, if the remittance also decreases, then there will be a serious crisis with the reserves. Therefore, necessary steps should be taken beforehand.