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Remittance flows are driving the economy

Published : Friday, 8 November, 2024 at 12:00 AM  Count : 293
Md Zillur Rahaman
Remittances have been buoyed since the ousting of dictator Sheikh Hasina and the formation of the interim government. A record amount of remittances has been coming into the country every month. As a result, in October, an average of $80 million in remittances came to the country each day. The total remittance or expatriate income for the recently concluded month of October reached $2.39 billion, marking the second-highest revenue of the year with an 80 percent growth. Remittances sent by expatriates increased by 21.31 percent in October compared to the same period last year. However, compared to September, the flow in October decreased by 0.41 percent. Since April, expatriates have sent more than $2 billion in remittances to the country, except for July. According to the data from the central bank, remittances from July to October of the current financial year reached $8.93 billion, up from $6.87 billion during the same period in the last financial year. The highest expatriate income this year was in June, amounting to $2.54 billion. As a single month, this was the highest amount of expatriate income in the country in the last three years. The previous record was in July 2020, when $2.59 billion came in.

Remittances sent by expatriates are significantly contributing to the development of Bangladesh. The amount of foreign exchange remitted by expatriates is equivalent to half of the country's total export earnings. Bangladesh Bank's reserve position has remained strong due to the support of expatriates. Remittances and export earnings are the two main sources of foreign exchange for a developing country like Bangladesh. Remittances, which represent income earned by expatriates, are considered the lifeblood of the country's economy, the foundation of development, the golden platform for dreams, and one of the key driving forces of the economy. The contribution of remittances to the country's development stands at 12 percent of the total GDP, and Bangladesh ranks seventh in the world for remittance receipts. 

However, the government has recently taken several precautionary measures in response to the decline in reserves and remittance flows of Bangladesh Bank. Economists emphasize the need to export skilled manpower and address existing challenges faced by expatriates to increase remittance inflows. Remittance money has not only created small entrepreneurs but has also helped strengthen the country's economy. 
A portion of the money earned by expatriates is sent to their families through banks. This money not only meets their families' needs but also plays a crucial role in the economic development of the country by raising living standards, improving infrastructure, stimulating savings, and encouraging investment in various sectors. Remittances serve as an important pillar for economic mobility, making them a key driver of the national economy. The government's confidence in expatriate remittances has increased. Remittances are also playing an important role in alleviating unemployment and fostering job creation. Moreover, thanks to manpower exports, a large portion of daily needs and foodstuffs no longer needs to be procured locally. There are about 12.5 million Bangladeshis scattered across more than 150 countries, and they are playing a positive role in the overall economy.

The number of expatriates is rising due to a large number of unskilled workers going abroad through brokers. However, labor-related remittances have not been increasing at the same pace. Higher-skilled expatriates have been employed in better-paying jobs and tend to remit more money over the long term than low-skilled workers. Studies show that unskilled workers remit far less than skilled workers. The quality of workers from Bangladesh is still low by international standards. It has been observed that unskilled expatriates, who often migrate illegally, are subject to fraud and difficulties, and are unable to send remittances legally despite their hard-earned money. This is why many of them resort to hundi to send their remittances.

Expatriates are supporting the interim government by sending a record amount of remittances, especially as the pressure to repay the large debt accumulated by the Sheikh Hasina government increases. Following the fall of Sheikh Hasina's government, remittance inflows through legal channels have surged. In October, expatriates sent $2.395 billion in remittances, and sector stakeholders confirm that remittance income has been steadily increasing since the beginning of this year. Although expatriates had called for a boycott of remittances in July amid student protests, remittance inflows have continued to rise in the months that followed, strengthening the country's foreign exchange reserves.

Remittances, which migrant workers send from abroad to their families or other recipients in the country, are considered a form of diaspora income. Analysts say that remittances play an indispensable role in the economy of Bangladesh. The money sent by expatriates not only strengthens the macroeconomy but also plays a significant role in poverty alleviation, food security, child nutrition, and education.

The writer is a Banker



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