Remittance from US nearly halved
Bangladesh has seen a drop in the inflow of remittance from seven out of the top 10 destinations with remittance from the US, the second largest source, falling to nearly half, according to an analysis of data from Bangladesh Bank on remittance received in the first quarter (July-September) half of the current fiscal reveals.
A dollar crisis hit the country following the Russian-Ukraine War, creating pressure on foreign reserves. The inflow of remittance also dropped through banking channels, mounting pressure on the foreign reserve.
Remittance earnings dropped by 12.34 per cent year-on-year to USD 4.91 billion in July-September of the 2023-24 fiscal with remittance plunging to a 41-month low to USD 1.34 billion in September.
According to the data from Bangladesh Bank, the top 10 sources of remittance earnings are the United Arab Emirates (UAE), Saudi Arabia, United Kingdom, United States, Oman, Malaysia, Kuwait, Italy, Qatar and Bahrain. Altogether these 10 countries account for 88 per cent of total remittance earnings. However, remittance from three countries -- UAE, UK and Oman, increased and seven other countries decreased.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), told Prothom Alo there has been high inflation in the country for the past couple of months, which is why it is usual that expatriates will send money home. In this case, there is no reason for dropping remittance earnings.
Remittance is coming, but less via banking channels because of the rise in hundi (unofficial money transfer channels) . Usually, such a situation arises when money laundering increases, he said adding pressure is mounting on foreign reserves due to the less remittance via banking channels, which is why money laundering must be prevented to come out of the vicious circle of hundi.
According to the Bangladesh Economic Review 2023, 54 per cent of the total manpower was exported to Saudi Arabia in 2022, followed by Oman with 16 per cent and UAE with 9 per cent.
Saudi Arabia and the US were the top two sources of remittance in the 2022-23 fiscal, but UAE beat them with a 5.65 per cent year-on-year rise to USD 830 million in July-September of this fiscal while Saudi Arabia and the UK came at second and third with USD 817.2 million and USD 588.8 million respectively.
Unlike the Middle East countries, no manpower is exported to the US. Instead, thousands of Bangladeshis have settled there permanently and several thousand students go to the US every year. This population mainly remits money to Bangladesh.
The US became the third biggest source of remittance earnings with USD 2.40 billion in 2019-20, and the second biggest source with USD 3.46 million in the next fiscal. Since then US had maintained second place.
The US now, however, has dropped to the fourth place as remittance earnings from there dropped by 48.81 per cent to USD 510 million in the first quarter (July-September) of the 2023-24 fiscal from 999 million in the same period of the previous fiscal.
When asked, Syed Mahbubur Rahman, managing director and chief exertive officer at Mutual Trust Bank Limited, told Prothom Alo a large portion of the Bangladeshis living in the US are educated, and their income did not drop.
Since the exchange rate of foreign currency is higher at the kerb market than in banks, many are choosing this way of money transfer, he said, adding that many are also considering the overall situation before sending their income home.
This report appeared in the print edition of Prothom Alo and has been rewritten in English by Hasanul Banna