Photo: Collected
The ongoing quota reform movement and the government's response have led some expatriates to resort to using informal channels like Hundi for sending remittances, bypassing legal avenues. Economists warn that a decrease in remittances, amid the current situation of limited internet access and restricted banking transactions, could pose significant risks to the country's economy. This includes a potential further appreciation of the dollar, which would exacerbate inflation.
As of July 24, only $150 crore in remittances had arrived in the country, with approximately $98 crore received in the first 13 days of the month and about $53 crore in the subsequent 10 days from July 14 to 24. In contrast, expatriate Bangladeshis sent $254 crore 16 lakh in remittances in June, highlighting the impact of the recent turmoil on the inflow of foreign currency. This decline in remittances could lead to broader economic challenges if the situation persists.
Relevant sources said violence, deaths, and internet shutdowns in Bangladesh have sparked anger among expatriates worldwide, leading some to campaign against sending remittances through legal banking channels. This could potentially cause a significant drop in remittance flow in the last week of July, making the total remittance for the month the lowest of the year.
Despite these fears, Mezbaul Haque, the executive director and spokesperson of Bangladesh Bank, remains optimistic. He believes that expatriates will not resort to using informal channels like Hundi and will continue to send remittances through official banking channels. Haque is hopeful that the loyalty and sense of responsibility of expatriates towards their home country will prevail, ensuring the continued flow of remittances through legal means.
He said, “Until July 24, $1.5 billion remittances have arrived in the country. However, this calculation may increase slightly. Because the bank was closed for five consecutive days. Banks opened on Wednesday and Thursday but the range of activities was very small. Banks were limited to cash deposits and withdrawals only. Remittance in Nostro account is not fully reconciled. Full account of remittances will be available by the end of the month if the banking activities become completely normal.”
According to data from Bangladesh Bank, while the export sector remains a significant source of foreign exchange for Bangladesh, remittances from expatriates play an even more crucial role. In the first 11 months (July-May) of the fiscal year 2023-24, the country earned $37.34 billion from exports. During the same period, expatriates sent $21.37 billion in remittances.
Economists highlight that against the $37 billion in export earnings, Bangladesh had to import goods worth at least $30 billion, leaving a net foreign exchange income of only $6-7 billion from exports. In contrast, remittances sent by expatriates do not incur such costs. These remittances not only meet the country's foreign exchange expenditure but also significantly contribute to increasing the national reserves. This underscores the critical importance of remittances in maintaining the country's economic stability and growth.
Dr. Salehuddin Ahmed, the former governor of Bangladesh Bank, emphasized the critical role of remittances in sustaining Bangladesh's economy during a discussion with The Daily Messenger. He stated, "The country’s economy is already under severe pressure. The dollar crisis in the country has been acute for the last three years. In this situation, remittances have kept the economy of Bangladesh alive. Now, if expatriates prioritize hundi over sending remittances through legitimate channels, the economic crisis will reach more dire levels. The prevailing high inflation of the country will be further fueled."
According to the data of Bangladesh Bank, the remittances received from July 19 to 24 were only $7.80 crore. Earlier, in the first 18 days, remittances came in on an average $7.90 crore per day. There is now a kind of tension among the expatriate Bangladeshis due to the violence and death in the country. In some countries of Europe, America, and the Middle East, expatriates held rallies and demonstrations in solidarity with the student movement. Among these, the announcement of remittance ‘shutdown’ has also come from some gatherings.
Sources said that the expatriates could not communicate with their families for the past few days as the internet was off. This has made a large part of them angry. Bangladeshis have held protest marches and rallies all over Europe including France. French expatriates have decided not to send direct remittances to the country for the time being. Many have said that they will send it in another way if there is an urgent need. It is a protest against firing on students.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told The Daily Messenger, “Bangladesh's financial transactions with the rest of the world were interrupted for five days due to the internet shutdown, making it impossible for expatriates to send income during this period. Remittances that should have been processed during this time were delayed. These delayed transactions were expected to arrive in the country by last Wednesday or Thursday, and if not, they were anticipated to come in by Sunday or Monday. If remittances do not arrive by these dates, it will indicate a significant disruption in expatriate income, which will put additional pressure on the economy.”
Messenger/Fameema
