Impact of COVID-19 on remittance – urgent response needed

Remittances have important implications on economic growth in many Asian economies including in Bangladesh. While Bangladesh ranks eighth globally in terms of receiving remittance income, it plays an important role to safeguard the country's foreign exchange and balance of payments, thereby contributing to the development budget. A number of proponents including the World Bank have recently suggested that its member countries should adopt urgent responses to mitigate the impact of COVID-19 on their remittance income. For major remittance-receiving countries including Bangladesh, the major concerns are to find remedies that can mitigate the impact, while catching up the pre-coronavirus remittance flow as soon as the pandemic is over. However, understandably this is going to be a difficult task.

Let us look at the global figures. According to the World Bank, total global remittance income was about $500 billion in 2019. As an immediate impact of COVID-19, we may see a 20 percent reduction of remittance income in 2020, which will be about $400 billion. However, such a drop has a serious spillover effect on the overall economy, which needs serious consideration. Among the 270 million international migrants, most of them live in large cities. While cities are facing serious lockdowns, such migrants are facing the dual prospects of lower or no support for health and their income.

For Bangladesh, there is even a dire prospect for two important reasons. First, a large number of Bangladeshi migrants living in the Gulf countries, where oil revenue is sharply falling, thereby affecting the prospect of wage reductions and job loss. Secondly, currencies in the Gulf countries and in Europe, another major source of remittance, are also falling against the US dollar, meaning a reduced amount of remittance to receive at the recipient end.

Now, what are the key measures that are imminent for Bangladesh? First, Bangladesh needs to focus on maintaining its food security, which can help the country to shield from imminent impacts of a revenue shortfall. Secondly, there is a need to bring people under digital banking as earliest. Mobile money transfer agencies need immediate support to reach remittance recipients in rural areas.

Finally, and more importantly, there is a need to provide support to our migrants through Bangladesh missions abroad. Such supports may include helping the migrants through local Bangladeshi and South Asian community groups along with host government supports in terms of healthcare, subsistence and social protection.