BD On Path To Set Annual Record
WB hails as remittance inflow rises to $19.8b in Jan-Nov
Remittance continued to surge with expatriate Bangladeshi nationals sending home $2.1 billion last month, up 31.3 per cent on year-on-year basis. This is the third straight month in which about $2 billion of remittance flew every month.
A World Bank report released on Friday said Bangladesh is among three countries including Mexico and Pakistan which exceptionally gained in remittance in an otherwise covid hit global economy. The Washington-based multilateral lender spoke highly about it.
This year's remittance up to November stood at $19.8 billion -- up 8.2 per cent year-on-year - meaning the country is heading towards achieving a record-level receipt at year-end, according to data from the Bangladesh Bank (BB).
Bangladesh received the highest-ever remittance last year at $18.3 billion. As per World Bank (WB) data, the inflows were projected to hit $20 billion in 2020, making it the eighth highest remittance-receiving country in the world.
The situation proved quite contrary to forecast by World Bank and the Asian Development Bank (ADB). WB had projected a 20 percent plunge in remittance in 2020 to about $14 billion amid in the pandemic hit global economy.
In July, the ADB made a similar grim outlook saying Bangladesh would be among the five worst-hit developing Asian economies in terms of remittance inflows. Remittance may fall by 27.8 per cent from its 2018 level which was $15.5 billion that year.
The "worst-case" scenario suggests economic recovery will take a year while the impact of the pandemic will persist throughout the year and dissipate halfway in the last three months.
But now, in its latest report "Covid-19 Crisis through a Migration Lens", the WB made a volte-face. Bangladesh, along with Mexico and Pakistan, stands out as exceptions to the general pattern, said the Washington-based multilateral lender in the report that was released on Friday.
"These countries escaped a decline in remittance inflows in the second quarter and seem to register increases in the third one," it added.
The spike in remittance inflows seems rather a suspect at a time when manpower export is virtually on hold since March and that the top sources for remittance -- the oil-rich Gulf nations, the US and Malaysia -- are very much in recession.
The collapse in the hundi system, an illicit cross-border transaction network supported by 2 percent incentive exchange rate may largely explain the gush of remittance, said Zahid Hussain, former lead economist of the World Bank's Dhaka office.
The hundi network collapse on international travel, slash in import business and medical tourism. All have been in the slow lane. "But the expatriate Bangladeshis are sending money home through legal channel which is secured," Hussain added.
The ongoing growth spurt of remittance then drives home the point of the uphill task the government still has to do to combat the menace of hundi which deprives the central bank of foreign currency reserves. As of yesterday, foreign currency reserves stood at $41.3 billion.
The state of the art mobile app to transfer remittance within minutes made formal channel highly acceptable for money transfer.
Another reason for the spike, particularly from the US, could be the higher returns on savings in Bangladesh. In much of the developed world, the interest rates are close to zero or even negative, Bangladesh offer higher rate to attract remittance.