Published in The Financial Express on Saturday, 2 February 2014.
Falling remittances to hit external sector hard
Economists for boosting manpower export thru pvt recruiters
Economists have warned that the declining trend in inward remittances will cause an adverse impact on the country’s external sector from next fiscal year as imports have started rising.
They also said there is a need for coordinated efforts to boost manpower exports in order to retain the external sector stability.
They said government-to-government (G2G) arrangement for manpower exports is not yielding desired results.
The Bangladesh Bank (BB), however, in its latest monetary policy said the decline in the flow of remittances will not affect external stability in fiscal year 2014.
The country’s remittance inflow dropped by nearly 3.0 per cent to $13.83 billion in 2013 from $14.17 billion in 2012. The fall is mainly attributed to drop in manpower exports during the period.
However, the country’s imports in five months ending November surged by over 9.0 per cent.
Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI) said there is no option but to boost manpower exports to keep stability in the balance of payments (BOP).
“Our present foreign exchange reserves are quite okay, but it will deplete fast unless remittance receipts improve,” Mr. Mansur said.
Bangladesh has now forex reserve worth over US$ 18 billion which is equivalent to meeting more than 5.5 months of projected imports.
Mr. Mansur, however, said diplomatic moves to enhance manpower export should be strengthened.
“In my view, the government-to-government arrangement has failed to yield its desired result. This is the right time to depend on the private international recruiters,” Mr. Mansur added.
Dr Mustafizur Rahman, executive director at the Centre for Policy Dialogue (CPD) said partnership between the government and the private sector could be considered now to export more manpower from Bangladesh.
“We’re really concerned at the sustained decline in the remittances.”
Dr. Mustafiz said market diversification is also necessary. “We now need to explore new markets to increase manpower exports.”
He also called for enhanced incentives for the expatriates to use formal channels to remit their hard-earned incomes.
Dr AK Enamul Haque, a senior researcher of the Dhaka-based ERG (Economic Research Group), said appreciation of taka against dollar is the main reason for the fall in remittances.
Currently, the dollar-taka exchange rate stood during July-December period at 77.80. It was Tk 81.4 during the corresponding period of 2012.
“I think manpower export will increase and remittance will now start rising as the country has some sort of peaceful environment,” said Mr Haque, also a professor of economics at the United International University.
Mr Haque said Bangladeshi expatriates are watchful over taka-dollar relation. It is natural for them to see whether the currency depreciates or not.
He said the expatriates always watch the currency movement.
“If there is any depreciation of our currency, the situation will start improving,” he added.