Cash incentive for remittance likely in next budget

Shakhawat Hossain | Published: 00:16, Jun 10,2019 | Updated: 00:59, Jun 10,2019

 
 

The government is planning cash incentive to encourage inflow of remittance while experts say that it would introduce multiple currency rates creating bad precedence and scope of abuse.
Finance ministry officials said that at least 1 per cent cash incentive for remittance senders was likely to be proposed by finance minister AHM Mustafa Kamal in the national budget for financial year 2019-20, scheduled to be placed in parliament on June 13.
They said that the planned step was political one to encourage inflow of remittance in formal channels although immediate-past finance minister AMA Muhith rejected a similar move in 2017.
Policy Research Institute executive director Ahsan H Mansur criticised the move saying that it would create multiple currency rates and establish a bad precedence.
Readymade garment exporters would be encouraged to push for their long-standing demand for multiple currency rates with the introduction of cash incentive for remittance senders, he said.
Ahsan H Mansur noted that if the gap between the currency rates became 2.5 per cent it would violate the international practice.
He said that chance of abuse by whitening illegal money through the planned scheme could not be ruled out.
Bangladesh suffered illicit capital outflow of $81.74 billion in 11 years since 2005, according to a report of Washington-based Global Financial Integrity released in January.
Remittance plays a vital role in meeting payment in a trade-deficit country like Bangladesh that has already received $15.06 billion remittance in July-May of the outgoing financial year, compared to $13.6 billion in the same period of FY18.
Bangladesh Bank officials said that the amount of remittance would cross $16 billion at the end of FY19 to better previous record of $15.32 billion in FY15.
Although the inflow of remittance slowed down in 2017, it bounced back in 2018 following initiatives, including checking illegal bills of exchange (hundi).
Former central bank governor Salehuddin Ahmed said that incentive for remittance senders should be given carefully so that vested interests could not abuse it.
The finance ministry officials said that former finance minister Muhith was against multiple currency rates and cash incentive for remittance senders.
In July 2017, Muhith in a note to the central bank, the finance ministry said that it was not possible to offer cash incentive to the remittance senders as the initiative would create a dual exchange rate, which was recognised as bonus system during Pakistan period.
Muhith had asked the central bank to reduce the service charge on inward remittance coming through banks, western union, bKash and post office to encourage the inflow of remittance.
Parliamentarians’ Caucus on Migration and Development chairman Israfil Alam at a consultation on national budget for fairer labour migration at MPs Club on May 26 said that the government decided to introduce 3 per cent cash incentive for remittance sent by migrant workers through banks.
‘Our prime minister announced the good news at the past cabinet meeting,’ he said.

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