We are perhaps aware of many paradoxes about Bangladesh.
The World Bank and other associated observers have long been talking about Bangladesh’s growth paradox despite poor governance, weak democracy, and fragile watchdog agencies. With Covid-19 impacting lives in almost all countries across the world and economies contracting, Bangladesh was not at all an exception.
However, many have been surprised with the speed of our economic recovery, or quick comeback to economic activity. Though there are debates with regard to our GDP growth in the last fiscal, especially in consideration of Covid impacts, many considering this to be close to the IMF forecast of 3.8%, most of them are now even agreeing on a better growth rate in the ongoing fiscal year ending June 2021.
Apart from quick recovery in the manufacturing belts, good agricultural harvests, and salvation of the global and local supply chains, analysts have been pleasantly surprised with the increasing trend in inward remittances. The country received inward remittances equivalent to $2.6 billion in July this year against $1.60bn in July 2019. For August, the figure was $1.96bn.
During the first 10 days of this month, the figure reached $922 million; observers again were surprised with the increasing trend of inward remittances, despite the reducing trend in overseas employment generation or even workers coming back from many Middle Eastern, Southeast Asian, and European countries with Bangladeshi concentrations.
The figure during first ten days of September is 72.65% higher than $534 million during the same time in September last year. The country brought in $572 million in remittance in the first 10 days of August, and during July 1-9, expats sent home $746 million, and the whole month’s remittance receipt as already mentioned was $2.6 billion, which was the highest inflow in history for a single month.
During the first two months of the current fiscal year, $4.56 billion in remittance arrived in Bangladesh, which was 50% higher than the figure in the same period of the fiscal year 2019-20. During the last fiscal year, the country received $18.20 billion. Riding on remittances, the country’s foreign exchange reserve has also increased to $39 billion, soon to touch $40 billion mark.
Global credit rating agency Fitch Ratings Inc forecasted that the annual remittance inflow for five Asian countries -- Bangladesh, India, Pakistan, Sri Lanka, and the Philippines may drop by 12% on an average, a threat of losing a sizeable amount of remittance earnings this year due to the Covid-19 pandemic. Earlier, the World Bank and the Asian Development Bank projected a 20% fall.
Bangladesh Bank data showed, during the January-August period this year, the country received $13.36 billion in remittance, while the total receipt in 2019 was $18.35 billion. Many in the government feel this figure may reach $20 billion if the uptrend continues during the rest of the three and half months to December, though we count our numbers on a July-June fiscal year basis.
On the other hand, the picture is not at all encouraging about overseas employment. Due to the spread of coronavirus, almost 200,000 blue collar workers who went on leave or vacation before could not return to their employing countries. Even 100,000 new workers could not travel to the destination countries despite the completion of all required formalities.
Besides, almost 100,000 additional workers had to return during the April-August period. Families of all these 400,000 workers are distressed now. Media reported, apart from the above 400,000 wage earners, around 2,000 workers are returning each day. While the regular flights were stopped, workers were sent back by evacuation or specially arranged flights. Regular flights resumed from August. 95,062 persons, mostly from Middle Eastern countries, returned between April 1 to August 30. Some 31,000 persons returned between August 15-30, out of them 10,000 returned during last four days of August.
Of those, 6,656 were women. Sources confirmed, the number of returnees are increasing every day.
BMET sources confirmed that overseas employment was already decreasing in 2018 and 2019. Overseas employment was totally closed during April to August this year. Before the corona spread, almost 2,000 people left the country with jobs overseas each day during the January to March period.
While few are focusing on immediate rehabilitation and aid to the returnee workers, many are surprised with the increasing trend in inward remittance. Seniors in the government are attributing this to 2% extra payment through budgetary allocation for every dollar the workers remit back to the country.
Some are feeling the intending-to-return workers are sending back all their savings to the country, where some are of the opinion that increased remittance is sent for helping the distressed relatives back home due to the corona effect.
A few think that in order to take advantage of the extra payment, some are even bringing back the money remitted or siphoned out before. However, many feel that the increased remittances may mostly be attributed to the closure of the informal or hawala route due to corona, since most of the money is being remitted through official channels during this Covid time.
The government has allocated Tk200 crores for rehabilitation of the returnee wage earners from abroad. The honourable prime minister has already declared a further amount of Tk500 crores in allocation. Disbursement of loans to the affected or distressed returnees are going to start soon.
However, this may not solve our problems at all. We need to regularly send our unskilled and semi-skilled workers abroad, especially to the Middle Eastern, Far Eastern, and European countries. As the markets or economies gradually return to normalcy, our diplomatic missions abroad must fold their sleeves and get into action in this direction.
Government-to-government relationships also should be synergized. Back home, NGOs and other development partners must be synergized to create adequate earning activities for the returnees along with the creation of jobs in the rural areas through reigniting the social safety net and disbursement of stimulus packages.
Mamun Rashid is an Economic Analyst.