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.