Photo: Collected
Various types of propaganda against the government of Bangladesh regarding the students' movement on quota reform have begun to impact the country's economy. Expatriate Bangladeshis in various countries, expressing solidarity with the students' demands, have announced that they will not send remittances through official channels. This shift has been reflected in the remittance flow over the past two weeks.
Concerns have been raised that the quota reform movement has dealt a significant blow to remittances, and export trade has also stalled. If this trend continues, it could severely impact the country’s reserves.
Economists noted that while the dollar had stabilized somewhat after more than two years of volatility, the situation has worsened due to the conflict and loss of life associated with the quota reform movement. Ahsan H. Mansur, Executive Director of the Policy Research Institute, told The Daily Messenger, “When the political situation deteriorates, the economic situation also suffers. Remittances have already decreased due to instability and will likely decrease further if the situation does not improve. Exports will also decline, and reserves will continue to shrink.”
According to Bangladesh Bank data, expatriate income has halved in the next two weeks compared to the first 13 days of this month. In the first two weeks of July (July 1 to 13), expatriate income was 7 crore 72 lakh 80 thousand dollars per day. In the next two weeks (July 14 to 27), the daily income of expatriates came to an average of 4 crore 20 lakh 57 thousand 857 dollars.
According to the data, in 27 days in July, expatriate income came to 156 crore 74 lakh 60 thousand dollars. In the first 13 days, 97 crore 86 lakh 40 thousand dollars came and 45 crore 70 lakh 50 thousand dollars came in 7 days from 14 to 20 July. And the next week i.e. from 21 to 27 July it dropped to 13 crore 80 lakh 60 thousand dollars.
According to this calculation, in the 27 days of July, the daily average income of expatriates came to 5 crore 40 lakh 54 thousand 74 dollars. This is less than the previous month (June). Expatriate income in June was 254 crore 16 lakh 50 thousand dollars. Daily expatriate income in that month was 8 crore 47 lakh 21 thousand 666 dollars.
According to sources, the country's foreign exchange reserves have been declining for nearly three years as expenditure outpaced income. The country's gross reserves rose to 48 billion dollars in August 2021 based on remittances sent by expatriates. Since then, the reserve has been depleting. Bangladesh Bank has been selling dollars from the reserve for the last two fiscal years to meet the government's foreign debt and import liabilities.
According to international benchmarks (BPM6) last June 30, the country's reserves were 21.78 billion dollars. However, net reserves on the same day were 16.77 billion dollars. Bangladesh is taking 4.7 billion dollars of loan assistance from the International Monetary Fund (IMF) to overcome the dollar crisis.
Meanwhile, Bangladesh Bank removed 1,420 crores or 14.20 billion dollars from the country's export earnings figures last month by correcting the data. In this, the export sector, which is in a trend of growth, has suddenly gone into a negative trend. The situation of foreign investment and loans or assistance in the country is also not satisfactory. Only remittances sent by expatriates were in a positive trend. It is also going to suffer a big blow in the prevailing unstable situation. This puts the country's dwindling reserves at risk of becoming more fragile.
Economists said, uncertainty has arisen in the flow of exports and remittances, the two main means of earning foreign exchange. A negative flow of remittances will put pressure on the country's foreign exchange reserves.
Eminent Economist Professor Abu Ahmed told The Daily Messenger, “Due to the ongoing situation, uncertainty has been created in all sectors of the country's economy, including export and remittances. Remittance flows are decreasing, exports are also decreasing. As a result, reserves are decreasing. This economic crisis may become more severe in the next six months.”
In response, the central bank is working to boost remittances through various strategies, including verbally instructing to purchase dollars at a higher rate than the fixed rate.
Messenger/Disha
