.webp)
Remittance inflow from the Kingdom of Saudi Arabia (KSA) – a top destination for Bangladeshi workers – declined 25.26 per cent year-on-year in the first half of FY24, amid continued struggle with dwindling forex reserves and global economic headwinds.
Data published by the Bangladesh Bank on Thursday show that in the July-December period of FY24, wage earners remittance inflow from KSA was $1.42 billion, compared to $1.90 billion recorded in the same period of FY23.
Manpower exports to the KSA have increased in recent years, but remittance inflow from this Middle Eastern country has been on a downward trend since FY22. Wage earners remitted $4.54 billion in FY22, which was 21.58 per cent of the total inflow recorded that year.
The figure posted in FY23 – a decline – was 17.39 per cent of total remittance income recorded that year.
In FY24, wage earners remittance inflow from KSA was 307.5 million, $291.36 million, $216.15 million, $250.73 million, $194.40 million and 165.47 million for the months of July, August, September, October, November and December respectively.
However, the inflow decreased by 14.88 per cent in December of FY24, compared to the previous month. In July-December period of FY24, total remittance inflow was $14.58 billion.
KSA is a major source for Bangladesh’s remittance income and a key manpower export destination. The total number of manpower in that country is 57,32,462 until November this year, which is 35.7 per cent of Bangladesh’s total expatriates.
In July, August, September, October, and November, the number of manpower exported to KSA was 39,583, 40,619, 43,142, 52,917, and 49,092 respectively.
Industry insiders blamed hundi – an illegal system of cross border transactions – for the decrease in the inflow of remittance from KSA. Migrant workers remit money through hundi instead of the banking channel, thereby depriving Bangladesh of much-needed revenue.
Speaking to The Business Post, a central bank senior official said on condition of anonymity, “The Bangladesh Bank wants to boost the inflow of remittance through the banking channel. But the remittance rate is frequently being changed by ABB and BAFEDA.
“As a result, the remitters of KSA are using the hundi channel instead of the banking channels for getting more taka. This has created issues for the country’s economy as well.”
Policy Research Institute of Bangladesh (PRI) Executive Director Ahsan H Mansur said, “Many influential people are involved in the hundi trade. As a result, the central bank cannot take action against them.
“But it is possible for law enforcement agencies and other regulators to track those facilitating the hundi system.”
He added, “Those involved in hundi are laundering money from the country through under-invoicing and over-invoicing. Besides, the inflow of remittance from KSA has dropped due to the upcoming national polls.”
Wage earners remittance inflow, during the first eleven months (January-November) of 2023, stood at $21.56 billion. Bangladesh posted the lowest remittance inflow in August and September of 2023, raising concerns for the economy.
Dr Zahid Hussain, former lead economist of World Bank Dhaka Office, said, “We actually have no stable policy. Banks are not following the fixed rate. Most of the banks are offering their own rate to remitters.
“Currently, banks are buying remittance at Tk 122 – Tk 124 from remitters and exchange houses, so it is clear that ABB-BAFEDA’s rate is not effective in the banking sector. This official rate disrupted the remittance inflow as well.”
Beneficiaries get Tk 109.75 per USD with 2.5 per cent incentive from the government and additional 2.5 per cent from the banks, while the informal markets are offering up to Tk 123 – Tk 124.
Bangladesh received the lowest amount of remittance since FY21 when the figures are compared to the first five months (July-November) of FY24.
The country earned $8.81 billion in remittance during the July-November period, compared to $10.89 billion in the same timeframe of FY21.
