Forex reserves reach record $38.15bn

[bluesky]

https://www.dhakatribune.com/business/2020/08/18/forex-reserves-reach-record-38-15bn

Forex reserves reach record $38.15bn
Mehedi Hasan

• Published at 10:06 pm August 18th, 2020

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Surging inbound remittances and enhanced aid from development partners contributed to the rise in forex reserves

The country’s foreign exchange reserves have hit a new height, setting a record of over $38 billion amid the coronavirus pandemic.

Foreign exchange reserves reached $38.15 billion for the first time on Tuesday, said a high official of the Bangladesh Bank.

Remittance inflow has played a vital role behind the surge in foreign exchange reserves, said the official, adding that the government’s initiative of issuing a 2% cash incentive against inward remittances had also played a vital role.

The reserves reached the $37.1 billion in July while it hit the $34 billion, $35 billion, and $36 billion marks in June.

The previous highest reserves were recorded on September 5, 2017, the amount being $33.68 billion.

In FY20, remittance earnings hit a record $18.21 billion, up by 10.88% or $1.79 billion from $16.52 billion in the previous fiscal year.

Bangladesh received a record $2.6 billion in remittances in July amid the pandemic. Bangladeshi expatriates sent back $2.6 billion in inward remittances in the first month of the new fiscal year, which was a new monthly record.

The surging inbound remittances and enhanced aid from development partners contributed to the rise in forex reserves to $38.15 billion on August 18.

Talking to Dhaka Tribune, Policy Research Institute Executive Director Ahsan H Mansur said: “The amount of money the Bangladeshi expatriates have sent during this pandemic was not their recent income.”

“The reason they sent such a huge sum of remittances was out of their fear that they might have to return home in the near future as many working in the Middle Eastern countries have lost their jobs due to a significant decline in oil prices.”

“A good number of migrant workers will lose their jobs and return to Bangladesh from different countries owing to the worldwide crisis created by the Covid-19 pandemic,” he added.

 

[kursed]

Bangladeshis have really turned themselves around. This is very good work, folks.

 

[bluesky]

Talking to Dhaka Tribune, Policy Research Institute Executive Director Ahsan H Mansur said: “The amount of money the Bangladeshi expatriates have sent during this pandemic was not their recent income.”

“The reason they sent such a huge sum of remittances was out of their fear that they might have to return home in the near future as many working in the Middle Eastern countries have lost their jobs due to a significant decline in oil prices.”

“A good number of migrant workers will lose their jobs and return to Bangladesh from different countries owing to the worldwide crisis created by the Covid-19 pandemic,” he added.

It is unfortunate that this pandemic is causing the loss of jobs of our expatriates in the ME. Since they are not very sanguine about the prospect of retaining their jobs, they have sent home almost all their money. This has caused the foreign exchange reserves to get fatter.

I hope the situation will reverse but there is a news that UAE has already sent back many people to BD. In a situation like this, govt people should open their eyes to the need for a continuous and massive industrialization of the country. Only industries can provide jobs to our people heavily.

The rise in foreign exchange has nothing to celebrate. Please read the news in post# 4.

 

[bluesky]

Bangladesh braced to receive hundreds of thousands of returnee migrant workers

Passengers wait in a queue maintaining social distancing as a preventive measure against the spread of the COVID-19 coronavirus to enter the Hazrat Shahjalal International Airport in Dhaka on June 25, 2020. (AFP)
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https://arab.news/r3z7a

Updated 29 June 2020
SHEHAB SUMON
June 29, 2020

• Government sets up $85m fund to help reintegrate expats into country’s labor market

DHAKA: Bangladesh is bracing itself to receive home hundreds of thousands of migrant workers laid off in their host countries due to the coronavirus disease (COVID-19) pandemic.

Dr. A. K. Abdul Momen, the Bangladeshi minister of foreign affairs, told Arab News on Sunday that the returning workers would be offered training and financial assistance to help them set up their own enterprises.

“We have created a fund of around $85 million to ease the plight of the returnees. They will be provided with soft loans through the expatriates’ welfare bank to start small businesses here,” he said.

Earlier this month, the International Organization for Migration warned that due to the global economic and labor crises created by the COVID-19 outbreak, hundreds of thousands of migrant workers would be expected to return to Bangladesh by the end of the year. According to the Bureau of Manpower, Employment and Training (BMET), more than 700,000 Bangladeshis left the country last year to work abroad.

The Bangladeshi Ministry of Expatriates’ Welfare and Overseas Employment said it was finalizing the reintegration plan.

“We will have a meeting in this regard on Monday. The returnees will be provided with the necessary training through our technical training centers across the country and later on receive soft loans to get self-employed,” Mosharraf Hossain, additional secretary at the ministry’s planning and development wing, told Arab News.

Shahidul Alam, another ministry additional secretary, said each returnee would receive up to $3,500 without any collateral. “If needed, they will be provided with a fund up to $6,200,” he added.

Data from Bangladesh-based international NGO BRAC indicated that 87 percent of returnees had no alternative sources of livelihood and more than one-third of them would run out of savings in less than three months.

“Almost all of them returned home hastily and were initially promised by employers that they would be returned when the situation became normal. But after several months of the pandemic, now they have little hope of joining their work again anytime soon as employers are not sure when they would be able to resume operations,” said Shariful Hasan, head of the migration program at BRAC.

According to BRAC, around 200,000 Bangladeshi migrant workers returned home between mid-February and mid-March, including 41,000 from Saudi Arabia, 38,000 from the UAE, and 20,000 from other Gulf countries.

Migration experts believe that Bangladeshi missions in the workers’ host countries, especially in the Gulf, should play a more active role in helping them stay in their duty locations.

Between mid-April and mid-June, another 17,000 migrant workers returned to Bangladesh from the Middle East and other Asian countries.

More than 2 million Bangladeshi workers are currently living in Saudi Arabia, which is the most popular destination for them in the Middle East.

The Middle East is also the main source of Bangladesh’s remittances and its second-largest foreign currency source after the garment sector.

Last year, $18.32 billion was transferred by Bangladeshi migrant workers, according to BMET, and 73 percent of remittances were sent from Gulf Cooperation Council (GCC) countries.

“In this context, Bangladeshi missions in the Middle East should make more synchronized and coordinated efforts to ease the plight of the migrants who are struggling with the pandemic situation in GCC countries,” Hasan said.

Momen said that the Bangladeshi government was trying to help workers stay in their current locations.

“I have already sent letters to the manpower-receiving governments, including the GCC countries, and requested them to employ the Bangladeshi migrants in some alternative sectors, especially in agriculture and fisheries.

“But in case of job termination, I also requested the migrants’ receiving countries to pay the workers six months’ salary as compensation,” he added.

 

[Shorisrip]

It is unfortunate that this pandemic is causing the loss of jobs of our expatriates in the ME. Since they are not very sanguine about the prospect of retaining their jobs, they have sent home almost all their money. This has caused the foreign exchange to get fatter.

I hope the situation will reverse but there is a news that UAE has already sent back many people to BD. In a situation like this, govt people should open their eyes to the need for a continuous and massive industrialization of the country. Only industries can provide jobs to our people heavily.

Indeed, the government needs to take a more proactive approach to economic growth. The "anglo-Saxon" model of free market growth isn't the most suitable in regards to cultural standards in Bangladesh. The East Asian model in actively playing a role in encouraging corporations and businesses is what the country needs. We're basically at the point Korea was in the 70s, and we need to diverge into light engineering like steel, pharmaceutical and shipbuilding as well as other export oriented sectors such as leather, rather than relying on just textile, which is soon to contract due to rising wages. Electronics also has great potential in Bangladesh, and the government needs to encourage current conglomerates in taking approach towards that industry like Walton has.

 

[bluesky]

Indeed, the government needs to take a more proactive approach to economic growth. The "anglo-Saxon" model of free market growth isn't the most suitable in regards to cultural standards in Bangladesh. The East Asian model in actively playing a role in encouraging corporations and businesses is what the country needs. We're basically at the point Korea was in the 70s, and we need to diverge into light engineering like steel, pharmaceutical and shipbuilding as well as other export oriented sectors such as leather, rather than relying on just textile, which is soon to contract due to rising wages. Electronics also has great potential in Bangladesh, and the government needs to encourage current conglomerates in taking approach towards that industry like Walton has.

Exactly. I am not well-aware of this East Asian model thing you said. However, going through the pages of national economic development of European countries and Japan, one can see all of them took a few centuries to industrialize themselves.

East Asia is just following this model and there are not many other models. Today, what we see in Europe is their post-industrialization phase. They have built a fully matured economy that mostly centers now on the service sector. An LDC just cannot emulate their development from building the service sector. It comes long after post-industrialization when the economy gets matured and a consumer society evolves.

However, BD thinks that constructing a few bridges and a tunnel here and there will cause its development. Rather, it should follow the European model when those countries initiated national development about three centuries ago. BD is a country that imports even finished goods like locomotives and train coaches and our PDF brats claim it is development.

BD itself should produce these goods. It has more than 160 million people to do that. However, it is not being done because leadership is absent.

 

[blain2]

Well done BD! Pakistan should pay heed and cut back on our urge to splurge.

 

[Michael Corleone]

I would be stupid if they don’t set up a sovereign fund and invest some of the money in diversified portfolio, 8 billion for starting would be great idea... dividends can pay for large projects

 

[Destranator]

I would be stupid if they don’t set up a sovereign fund and invest some of the money in diversified portfolio, 8 billion for starting would be great idea... dividends can pay for large projects

Forex does not just sit around. BB invests them in overseas bonds and savings accounts in multiple currencies.

 

[idune]

Out of this $38 billion foreign currency reserve publicized about, more than one third came as "foreign currency loan" borrowed by private entities from foreign sources. Nearly $10 billion in 2017-18 and that number is well over $10 billion in 2020. That said, real foreign currency reserve is less than $28 billion.
-----
According to the Bangladesh Bank's latest Annual Report (2016-17) the amount of foreign currency loans snowballed to a staggering $9.43 billion on June 30, 2017. It represents a hefty 28 per cent of the foreign exchange reserve of $33.49 billion on that date.Jun 2, 2018

The hidden dangers of private foreign currency loans
https://thefinancialexpress.com.bd/views/the-hidden-dangers-of-private-foreign-currency-loans-1527953480

 

[blain2]

BD should lend a few dollars to Pakistan to save the embarrassment imran khan govt is facing on the international front.

I don't think Imran Khan or Pakistan is facing any embarrassment. Its a tough fiscal situation. Covid-19 has exacerbated the problems but the policies being implemented now will pay dividends in the long run. For the short to medium term, Pakistan will have to wade through a tight fiscal situation.

The upside is that the country has done well in the face of Covid-19. Even the most vulnerable in these circumstances have been catered to by the government. Alignment with IMF is in place. Budget deficit (thanks to reduced imports) is improving. As such, nothing ever is black or white. Even in the worst of times for one sector, there are improvements being made in other.

The glass is always half full!

 

[Michael Corleone]

Forex does not just sit around. BB invests them in overseas bonds and savings accounts in multiple currencies.

That’s good to hear... then I reckon the govt profits from this 38 billion... why even have taxes then? Atleast not the high rate they demand nowadays

 

[Michael Corleone]

Out of this $38 billion foreign currency reserve publicized about, more than one third came as "foreign currency loan" borrowed by private entities from foreign sources. Nearly $10 billion in 2017-18 and that number is well over $10 billion in 2020. That said, real foreign currency reserve is less than $28 billion.
-----
According to the Bangladesh Bank's latest Annual Report (2016-17) the amount of foreign currency loans snowballed to a staggering $9.43 billion on June 30, 2017. It represents a hefty 28 per cent of the foreign exchange reserve of $33.49 billion on that date.Jun 2, 2018

The hidden dangers of private foreign currency loans
https://thefinancialexpress.com.bd/views/the-hidden-dangers-of-private-foreign-currency-loans-1527953480

Even if it’s 28 billion it’s still a good number... besides govt. is not obligated to pay for private borrowings

edit: read the article. My mistake, that’s dangerous indeed I thought loans borrowed by people in foreign countries not the private sector.

 

[Pakistan Space Agency]

Does Bangladesh count the regular incoming remittances from expatriots as foreign reserves?

 

[The BrOkEn HeArT]

This is a result of making good relations with India. Congrats.