Remittance and Economic Development

Remittance and Economic Development:

Remittance income does not benefit just individual recipients, it benefits the local and national economies in which they live. Indeed, the spending allowed by remittances has a multiplied effect on local economies as funds subsequently spent create incomes for other and stimulate economic activity generally. Remittance also help  Bangladesh in making the balance of payments favorable or   makes up the deficit between total export and import. Remittance can provide receiving countries with much needed foreign exchange. As noted at the outset of this chapter, remittances are a more stable and reliable form of foreign earnings in many developing countries than either FDI or aid flows, and help alleviate the balance of payments and debt crises that are often a  characteristics of such countries. In this sense, they are also a potentially stabilizing factor for national currencies and can provide developing countries with lower borrowing costs by presenting them with a stable flow of foreign exchange ‘collateral’.

Recommendation:
To protect migrant abroad and to try and retain remittance levels the Government needs to priorities this issue. Recommendations include:-                

# Agree to steps with Saudi- Arabia and Kuwait to protect Bangladeshi’s  working their.              # Ensure that good relations are maintained with existing migrant destinations such as UAE,      Malaysia, Oman, and Qatar through diplomatic intervention.                

# Examine farther alternative migrant destination including Iraq, Bahrain, Mauritius, Sudan,   Libya and South Africa.                  

# Seek technical and financial support from the ILO and initiate memorandums of understanding (MOUs) between Bangladesh and the destination countries of the migrants.

Foreign currency reserves:
For the first time since independence of Bangladesh county’s foreign exchange reserve has dropped bellow US $10 billion. Under such situation, it will be difficult for the country to meet next three month’s import costs. Following such situation, exchange rate of US dollar is increasing in the local market . Average foreign currency reserves   ware US $10.75 billion in 2009-2010 fiscal year and US $10.91 billion in the last fiscal year (2010-2011). In March 2011, the reserves hit US $ 11.32 billion, the highest in the country’s history. A country  needs foreign reserve mainly for two reasons: Firstly, to synchronize its receipts and payments with the rest of the world and secondly,  to withstand occasional speculative raid by the dealers in the foreign exchange market. The national Monetary fund (IMF) has projected that Bangladeshi’s foreign currency reserves may fall by $1 billion by the end of the current fiscal year mainly because of increased spending on oil import.

Following the current crisis of foreign currency reserve, most of the experts are suggesting the government to suspend all heavy budget projects such as Elevated Expressway, Bangabandhu International Airport etc in order to allow country’s economy to get into a better situation. 

Ramittance and forex reserve of Bangladesh

Writer: Md. Ahsanul Kabir

Introduction:
Remittance is a transfer of money by a foreign worker to his or her home country. Remittances contribute to economic growth and to the livelihoods of people world wide. Moreover, remittance transfers can also promote access to financial services for the sender and recipient, thereby increasing financial and social inclusion. Remittances also faster in the receiving countries, a further economic dependence on the global economy instead of building sustainable, local economies.

 

History:
Remittances are not a new phenomenon in the world, being a normal concomitant to migration which has always been a part of human history. Several European countries, for example Spain, Italy and Ireland were heavily dependent on remittance  received from their emigrant during the 19^th and 20^th centuries. In the case of Spain, remittances amounted to the 21% of all its current account income in 1946.Italy was the first country in the world to enact  a law to protect remittances in 1901. Spain was the first country to sign an international treaty (with Argentina in 1960) to lower the cost of remittances received.

Manpower export:
The Bureau of Manpower Employment and training source said more then 76 lakh Bangladeshi workers are working in 143 countries across the world. Of them 80 percent are working in Saudi-Arabia, Malaysia, Kuwait, Qatar, Jordan, UAE, Bahrain and Lebanon. The rest are working in Egypt, Brunei, Darussalam, Libya, South korea, Japan, and other countries. The BMET source said “the government is now providing training through its 38 training centers to the migrant workers and some 35 centers are expected to be established soon to provide training for the job seekers.

Bangladesh & Remittance:
Bangladesh has emerged as the eight largest remittance earner in the world. Among  the development countries, Bangladesh holds the fifth position. Bangladesh’s inward remittance stood at $12.17 billion upto December, 2011, according to the statistics of Bangladesh Bank. The country received $1.1 billion remittance in December 2011 form non-resident Bangladeshis. The remittance earned   in December 2011, was 25.92 percent higher than that of November the same year and 18.09 percent higher than that of December 2009.Inward remittance rebounded in October on the eve of Eid-ul-Azha, as it increased by 23 percent over that a month ago. The central bank figures showed that during the last fiscal year (2010-2011), Bangladesh received their highest remittance of $3290.03 million from Saudi-Arabia, followed by $2002.63 million from UAE, $1075.75 million from Kuwait, $334.31 million from Oman, $319.36 million from Qatar, $ 185.93 million from Bahrain and $5.20 million from Libya.