Use remittance money productively
03 June 2021 22:12:44
Maintaining an upward trend in migrant worker remittances during the last 11 months of July to May of the current fiscal year (2020-2021), the total amount of remittances stood at around $ 23 billion. of dollars. This is 39% more than in the same period of the previous fiscal year (2019-2020). Interestingly, development has consistently defied all negative forecasts warning of a sharp drop in remittances from the World Bank and other global financial institutions. Migrant workers, they feared, would lose their jobs in their pandemic-stricken host countries and return, further compounding problems at home, where the government was also battling the virus!
True, many migrant workers have returned home, and the number of new workers going abroad has also dropped significantly in recent months.
And remittances, indeed, have plunged in the first three months since the pandemic struck in March 2020. But at the end of the last fiscal year, the positive trend began which continues so far. Unsurprisingly, the central bank hopes the total amount of remittances will reach $ 25 billion by the end of the current fiscal year.
A word of warning; there is still no room for complacency or excess about the upward trend in remittances and planning for the future based on the current scenario.
There is no doubt that the government’s 2.0% cash incentive on remittances paid since July of last year has encouraged expatriate employees to use official channels, rather than informal, non-bank channels. , to send their winnings home. Additionally, the zero interest rate on bank deposits, especially in North America and Europe due to the pandemic-induced economic downturn, has prompted expats there to transfer the lion’s share of the dollars they they won at home. And the narrowing of exchange rate differentials between informal and formal channels has certainly led employees to use legal banking channels more often than other means, whether legal or illegal. Next, consider the higher interest rates on deposits (over five percent) offered by Bangladeshi banks to attract these expatriate workers.
These, including a host of other reasons, may have influenced the trend in remittances observed since the start of the current fiscal year (fiscal year 2020-21).
Nonetheless, these are the best possible hypotheses put forward to explain the behavior of remittances under the pandemic situation. But we still need to be certain of a foolproof response to the phenomenon of increasing inbound remittances under review.
Under these circumstances, the government would do well to take advantage of the continued increase in remittances to achieve a goal of sustainable future growth in the sector. And at the same time, plan to use the money wisely in productive sectors.
In this context, it should be noted that expats who send their hard-earned dollars home are mostly low-skilled and low-paid workers. Their families back home, the recipients of the money too, use it only to meet their consumer needs and not so much in a productive business. No wonder farmland is being bought more and more to build semi-pucca or pucca structures in the countryside. Such unproductive use of the money sent must be brought under control. Needless to say, adequate incentives, including easy bank loans, vocational training arrangements, would go a long way in motivating these people to use the money from their remittances in productive sectors.