Remittance inflow may decline further: Experts

Bangladesh witnessed an unprecedented boom in remittance inflow amid the Covid-19 pandemic, hitting the single-month record of $2.6 billion in July last year. But the cash inflow has been declining and it may come down further in the coming days, experts say. 

Remittance dropped 28% to $1.87 billion this July from a year ago, according to a recent report of the Bangladesh Bank, which notes that inflow also decreased by more than 3% in the same month compared to the previous one despite the Eid-al-Adha festival.

Distinguished Fellow at the Centre for Policy Dialogue (CPD) Dr Mustafizur Rahman said Bangladesh may witness a negative growth in this sector in the near future.

As he elaborated his comments, "I think it will be quite difficult to get more than $24 billion in remittance in the current fiscal year similar to the last FY, as many migrants remitted their savings at that time. 

"Bangladesh should not expect the remittance growth attained amid the pandemic to increase further. The factors that contributed to the growth are having less of an impact now."

Dr Mustafizur Rahman thinks that the inflow will gradually return to the pre-pandemic trend.

Economists told The Business Standard that though Bangladesh had received less remittance this July, the inflow was not an abnormal figure when matched with the Eid months of pre-pandemic times.

In FY 2020-21, the July inflow of $2.6 billion was an increase of 62.5% compared to the remittance sent a year ago. The country's remittance earnings reached an all-time high of $24.78 billion in the last fiscal year despite the Covid-19 pandemic.

Speaking on the issue, Tasneem Siddiqui, founding chair of Refugee and Migratory Movement Research Unit (RMMRU), said, "When Bangladesh was witnessing a boost in remittance, we had stated that it was not a normal trend and it would gradually come down to the pre-pandemic trend.

"Around 5 lakh migrants returned home amid the pandemic, and the overseas employment rate was significantly lower last year. So, we may be witnessing the effects of such issues now. We have to wait, however, a few months to understand the dynamics of remittance in the coming days."

Last December, RMMRU projected that as the year-on-year migration rate had already declined by around 71% due to the Covid-19 pandemic in 2020, the increasing remittance stream might tumble in 2021.

More than 7 lakh newly recruited Bangladeshis went abroad in 2019, but only 2.17 lakh workers migrated abroad last year, as revealed by data from the Bureau of Manpower, Employment and Training (BMET).

So far, till May this year, 1.95 lakh Bangladeshis have left home for employment abroad.

Reflecting on the matter, Syed Mahbubur Rahman, Managing Director and CEO of Mutual Trust Bank, said, "Normally, the remittance flow slows down just after Eid. And Eid-Al-Adha celebrations took place in July this year.

"Besides, the economies of the destination countries are in a state of recovery, which will have a positive impact on the overseas labour market."

Adding that it was too early to say that the fall in remittance would become a trend in the coming months, Mahbubur said, "We will have to wait for a few more months to understand the situation."

The central bank, in its monetary policy statement for FY22, said stronger inflows of wage earners' remittances in the 2020-21 Fiscal Year were possible mainly due to the government's drives to prevent remittance inflow through informal channels.

The government also encouraged remittance through the formal banking channel by offering a 2% incentive to beneficiaries, along with the central bank's initiatives to ensure a time and cost-effective money transfer process.

RMMRU in December last year said those who were likely to return home soon were remitting their savings beforehand. Besides, Bangladeshi workers abroad had been sending more money to their families to counteract the virus fallout and natural calamities such as floods.

On top of this, government incentives for remitting money through legal channels had helped increase the remittance inflow, the organisation said.

Speaking to The Business Standard, CPD's Research Director Dr Khondaker Golam Moazzem said, "The remittance increase amid the pandemic was an abnormal growth. So, it is pre-assumed that remittance will fall."

"Normal working conditions are yet to return in the Middle East and Southeast Asian destinations, especially in Malaysia. As such, migrants do not have sufficient money."

Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said, "Last year, amid the pandemic, there were some portfolio investments from expatriates and a large amount of black money returned to the country. So the inflow of remittance was high.

"But currently the income of our migrant workers has dropped drastically and many of them have already returned home. Therefore it is quite natural that remittance flow is in decline."

Of the banks, Islami Bank Bangladesh Ltd collected the highest $550.30 million in remittance sent by expatriate Bangladeshis in July this year. Besides, Dutch-Bangla Bank $229.11 million, Agrani Bank collected $194.80 million and Sonali Bank $117.49 million in the same month.

The record high remittance of $24.77 billion in the previous FY21 came as a continuation of the $18.20 billion inflow reported in FY20 amid the Covid-19 pandemic.

Overseas employment of Bangladeshi nationals reached its all-time peak of 10.08 lakh jobs in 2017. In that year, the country's remittance income amounted to $13.52 billion.