Remittance slide continues

Inward remittance from the Bangladeshi diaspora continues to slide, now posing a real threat of depreciation of the Bangladesh taka against the US dollar.

The remittance inflow in July was $1.11 billion, down 8.26 percent from the previous month, according to data from the Bangladesh Bank.

Remittance inflow in fiscal 2016-17 has been the lowest in six years. Migrant workers sent home $12.77 billion last fiscal year, down 14.47 percent year-on-year.

Although the official explanation being pushed for the shrinking remittance inflow is the persistent weakness in the Gulf Cooperation Council economies, where the majority of the migrant workers reside, it does not present the full picture.

The growing popularity of digital hundi among migrant workers is another reason for the lower official remittance figures in recent times.

Through this illegal channel the recipients in Bangladesh tend to get a bigger sum than what they would have if the money was sent through the official channel.

Amidst the scenario, curiously, the central bank has been calling banks to urge them to keep the exchange rate for remittance close to the inter-bank rate.

Banks offer Tk 80.70 to Tk 81.40 per dollar for remittance, while the inter-bank rate is less than Tk 80.70.

Remitters get nearly Tk 1 more than the bank rates if they send the money through the informal channel.

The central bank, in its latest monetary policy statement, said it  is  getting harder,  even  impossible  in  some  instances, for migrant workers  to  access  legitimate  channels  for sending  money  home.

The reason being the unduly stringent anti-money laundering and counter terrorist financing laws, which are increasingly pushing the migrant workers towards the informal hundi channels, it said.

However, the government  and  the BB are  pursuing  further  facilitation  and  widening  of legitimate  remittance  channels  for  the  migrant workers abroad, said the MPS unveiled on July 26.

Further avenues bearing promise of significant   near-term   gains   in   remittance inflows  include  promoting  sales  of   Wage  Earners  Bonds  and  Taka Treasury  Bonds,  both  offering much better yields than the migrant workers can get on their  savings  in  the  host  countries.

It also said apartment purchase  loan  facilities  in  Bangladesh  can  also  be marketed  more  actively  to  attract  foreign  savings of our migrant workers. 

Remittance is a major source of foreign currency for Bangladesh and its descent since fiscal 2015-16 has progressively become a matter of concern for the government.

There has been a supply-demand mismatch of the US dollar due to the declining inflows.