Remittance tumbles 23pc

Remittance tumbled 22.68 percent year-on-year in September due to a decline in the income and savings of Bangladeshi expatriates living in the Middle East as a result of the oil price slump.

Migrant workers sent home $1.04 billion last month, according to the Bangladesh Bank's provisional data. The amount is 11.83 percent lower than August's receipts of $1.18 billion.

September's receipt means remittance saw a huge fall in the first quarter of the fiscal year: some $3.23 billion was received, down 17.82 percent from a year earlier.

Overall, remittance fell 2.54 percent year-on-year to $14.93 billion in fiscal 2015-16, despite a significant rise in migrant outflow in the previous two fiscal years.

The decline in oil price, which dropped to its historic low in January this year from its historic high in mid-2014, affected incomes in the Gulf Cooperation Council economies, weakening the demand for migrant workers.

“The bonus and overtime payment have come down. Their per capita income has gone down while their living cost has gone up, which has cut their savings,” said Zahid Hussain, lead economist of the World Bank's Dhaka office, while speaking at the unveiling of the Bangladesh Development Update yesterday.

The declining remittance comes despite a significant increase in the number of Bangladeshi workers abroad, said the WB report.

In fiscal 2015-16, the number of migrant workers increased 7.6 percent -- the highest in the last seven years.

The number of migrants going abroad reached 6.8 lakh in fiscal 2015-16, up 48 percent year-on-year.

About 71.3 percent of the migrants in fiscal 2015-16 went to the GCC countries.

Saudi Arabia accounted for the highest incremental share, while a significant number also went to Oman, Qatar and Malaysia. Migration to Singapore has been steady.

Female migration has also surged, with the number exceeding 100,000 in fiscal 2015-16 for the first time since fiscal 1991-92. The WB said there has been a rise in unemployment and/or a decline in wages of illegal migrants in the GCC countries in particular as the authorities crack down on illegal migrants.

There is anecdotal evidence that the real income of migrants is waning in the GCC countries, as prices for staple goods and public services have increased, according to the report.

The unemployment rate among Saudi citizens is 11.5 percent, but relatively few have lost jobs because of legal complexities in firing Saudis. “Hence, the weight of layoffs has fallen on foreign workers,” the WB said.

Saudi construction firms have been hard hit due to the lower oil prices, which have curbed and, in some cases, delayed government spending on major infrastructure projects. If the ongoing fiscal consolidation in the GCC countries is sharper than expected, remittance flows could slow sharply, the WB said.

The propensity to remit may also have been adversely affected by the decline in interest rates, the report said.

The deposit rate fell from 7.26 percent in January 2015 to 5.67 percent in May 2016. The interest rate on national savings certificates was cut by 2 percentage points in May 2015. Remittance sent by more than eight million migrant workers plays a crucial role in the country's economy, helping reduce the overall incidence of poverty as well as maintaining a healthy balance of payments.