Maintaining an upward trend in the remittance inflow from migrant workers over the past 11 months from July to May of the current fiscal year (2020-21), the total remittance receipt stood at around US$23 billion. This is 39 per cent more than what it was during the same period of the previous fiscal (2019-20). Interestingly, the development has been consistently defying all negative forecasts warning of a sharp decline in remittance made by the World Bank and other global financial institutions. The migrant workers, it was feared, would lose their jobs in their pandemic-hit host countries and come back further compounding problems at home where the government was also fighting against the virus!
True, many migrant workers did return home and the number of fresh workers going abroad, too, has declined markedly in the past months.
And the remittance, indeed, did plunge in the first three months since the pandemic struck in March 2020. But by the end of the last fiscal, the positive trend began which is continuing till now. Not unexpectedly, the central bank hopes that the total remittance receipt would be as high as $25 billion by the end of the current FY.
One word of caution; there is still no room for complacency or going overboard about the prevailing uptrend in remittance and planning the future depending on the present scenario.
No doubt, the government's 2.0 per cent cash incentive on remittance being disbursed since July last year has encouraged the expatriate wage earners to use the official, rather than the informal, non-banking channels, to remit their earnings home. Also, the zero-interest rate against bank deposits, especially in North America and Europe due to pandemic-induced economic slowdown, has prompted expatriates there to transfer the lion's share of the dollars they earned back home. And the narrowing down of discrepancies in the exchange rates between the informal and formal channels has definitely led the wage earners to use the legal banking channels more often than other means whether legal or illegal. Then consider the higher interest rates on deposits (more than five per cent) offered by Bangladeshi banks to attract these expatriate wage earners.
These including a host of other reasons might have influenced the trend of remittance as being observed since the beginning of the current fiscal year (FY 2020-21).
Even so, these are the best possible hypotheses put forward to explain the behaviour of remittance inflow under the pandemic situation. But one is yet to be certain about a foolproof answer to the phenomenon of rising inward remittance under scrutiny.
In the circumstances, the government would do well to build on the ongoing surge in remittance inflow to achieve a sustainable future growth target in the sector. And at the same time, plan to use the money judiciously in the productive sectors.
In this context, it is to be noted that the expatriates sending their hard-earned dollars home are mostly low-paid unskilled workers. Their families back home, the recipients of the money, too, use it just to meet their consumption needs and not in any productive venture so much. Small wonder that farmlands are increasingly being bought to build semi-pucca or pucca structures on them in the countryside. Such unproductive use of the remittance money has to be held in check. Needless to say, adequate incentives including easy bank loans, arrangements of skills training would go a long way in motivating those people to use their remittance money in the productive sectors.