A slowdown in remittance inflows will impact the country’s economy
Six-day internet blackout in Bangladesh severely impacted the collection of remittances through banks and mobile financial services (MFS), potentially straining the country’s foreign exchange reserves. From July 18 to 23, when the internet was partially restored, remittance collection was halted, causing significant disruptions. Typically, Bangladesh receives $80 million to $100 million in remittances daily.
BRAC Bank’s managing director, Selim R F Hussain, indicated that while remittance flows normalized after broadband services resumed, overall remittance collection for July would likely be lower. Limited internet access hindered the ability of banks and MFS providers to process international payments via SWIFT. For example, Mercantile Bank struggled to collect remittances due to slow connections.
MFS providers, which usually mobilize Tk 5 crore to Tk 7 crore in remittances daily, saw this figure drop to Tk 80 lakh. Despite these challenges, Bangladesh received $978 million in remittances from July 1 to July 13.
If Bangladeshi workers abroad stop sending remittances, the country’s economy would face severe repercussions. Remittances are a vital source of foreign currency, contributing significantly to foreign exchange reserves. A sudden halt would deplete these reserves, weakening the country’s ability to import essential goods and pay off international debt. This could lead to a depreciation of the Bangladeshi Taka, causing inflation and increasing the cost of living.
The government would struggle to maintain its balance of payments, exacerbating the fiscal deficit. Development projects and public services might face budget cuts, hampering infrastructure growth and social welfare programs. Additionally, the livelihoods of millions of families dependent on remittance income would be jeopardized, increasing poverty rates and social unrest.
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