Unorthodox reform ideas invited for boosting remittances

Thought-provoking reform ideas have been invited for netting more remittances which can help resolve the prevailing foreign-exchange and other macroeconomic problems facing Bangladesh.

As current measures and bets for remitters couldn't deter remittance and forex diversions, Finance Minister AHM Mustafa Kamal made the call Monday at a public-finance summit meet held in conjunction with the World Bank in quest of remedies in the financial sector.

He says remittances have always played a vital role in Bangladesh's economy but, despite increased numbers of workers going abroad, the pace of inward remittance could not be maintained.

"More and more people are going abroad, but remittances are not commensurate with the number of expatriates going abroad," he told the meet.

In the wake of dollar crisis and depleting foreign-exchange reserves of the country, reports are rife about wage-earners' foreign currencies being siphoned off or received and traded through high-rated informal dealings.

Mr Kamal was speaking as chief guest at the Public Finance Management Summit 2023 jointly organised by the ministry of finance and the World Bank in Dhaka.

He mentioned that the government could increase inward remittances from US$7.9 billion to $24.3 billion after introducing 2.0-percent incentives for the remitters.

However, the momentum did not last. So far, 10 million Bangladeshi people are working abroad and the number is growing every year, but the remittance inflow did not increase proportionately.

"Remittances could have reached 30 billion dollars a year," he said about the unusual gap, stressing higher bets for reversal of the forex flight.

"Let us take necessary measures to augment the remittance, pursuing both fiscal and monetary policies," the finance minister made the call for an unorthodox change.

"I simply request you to kindly come up with your thought-provoking reform ideas, to bring more remittances," he said addressing the cutting-edge audience.

Mr Kamal claims Bangladesh has achieved several milestones in public-finance reforms during the last 15 years alongside important macroeconomic achievements, under his stewardship in the exchequer.

To underpin his statement, he said Bangladesh is now the 35th-largest economy in the world while the GDP size increased four and a half times to $454 billion now from $91 billion back in 2008.

On average, the finance minister said, the gross domestic product (GDP)-growth rate was 6.6 per cent during 2009-2022 period, up from 5.8 per cent in-between 2002 and 2008.

"Likewise, our per-capita national income increased four times from $760 to $2,765."

Mr Kamal said during the last 14 years the government created 23.8 million new jobs at home and jobs for another 7.1 million people abroad.

Inflation remains high in Bangladesh, amid consumer price rises, in the wake of a new crisis while there has been an economic rebound from the pandemic-time upset. In this respect, he said the rate of inflation was as high as 12.3 per cent in 2008. "We had successfully contained it to 5-6 per cent until the Ukraine-Russia war broke out."

Speaking as special guest World Bank Country Director for Bangladesh Abdoulaye Seck observed that strong public financial-management systems help ensure effective and efficient service delivery and good governance.

"This is now more important than ever, as we are confronted with an array of complex and unprecedented global challenges, including the ongoing repercussions of the COVID-19 pandemic, Russian invasion in Ukraine, climate change, and others," he said.

"In the face of these challenges, the role of effective public financial management has never been more vital," he notes.

The World Bank country chief feels that the PFM Summit 2023 serves as a platform to recognise Bangladesh's accomplishments in the realm of public financial management over the past three decades and discuss reforms needed to address existing and emerging challenges.

"PFM is not merely a tool; it constitutes the means to achieve broader development objectives, encompassing robust public institutions, macroeconomic stability, efficient resource allocation, and effective public service delivery," he reminds.

He also underscored acknowledging the persistent gaps and the urgent need for reform.

The World Bank executive lists six critical dimensions of PFM reform: transparency and accountability inclusivity, sustainability, innovation and technology, capacity building, and global partnerships.

World Bank practice manager for South Asia Region Hisham Waly underscored the need for having a sustainable PFM in Bangladesh for a sustainable future.

At the summit meet on financial front five former finance secretaries in a session shared their experiences on institutionalisation of the PFM reform. They are Zakir Ahmed Khan, Dr Mohammad Tareque, Fazle Kabir, Mohammad Muslim Chowdhury and incumbent Bangladesh Bank governor Abdur Rouf Talukder.

syful-islam@outlook.com