Sustaining higher remittance inflow

What amounts of remittance dollars the wage earners are sending home every month from abroad had never been so concerning as it is now. This is for the simple reason that remittance is the major source of hard currency to supplement the country's declining foreign exchange reserve. Notably, the reserve has been falling after reaching a peak in August 2021 at US$48 billion. At that time, inflow of remittance increased but the outflow of foreign currency reduced significantly as the economy came to a virtual standstill thanks to the Covid-19 pandemic. But from the following months the scenario began to change as economic activities resumed with increase in the expenditure of foreign currency to meet obligations of external trade such as footing the import bills, servicing debts, etc. In consequence, the net reserve started to shrink and the trend has shown no respite since despite the austerity measures like discouraging non-essential imports, restricting foreign travels and so on adopted by the previous government.

Amid this gloom, the report that the country recorded last month the third highest remittance receipt of US$2.40 billion in the last 50 years is indeed uplifting. In comparison with the remittance receipt of US$1.33 billion in September 2023, this is an 80 per cent increase year-on-year. Why was this sudden surge in remittance inflow without any Muslim religious festival when higher remittance is received? The higher amounts of remittance receipt of US$2.22 billion recorded in August and in September have left observers guessing what exactly prompted remitters to send more money. This may be a mark of the remitters' confidence in the interim government.

However, the highest ever remittance amounting to US$2.59 billion was sent by expatriate wage earners in July 2020 followed by the second highest at US$2.54 billion in last June, 2024. Now the question is, if this rising trend in remittance receipts would sustain in the long run. According to some central bank (Bangladesh Bank, BB) officials as reported in this paper, proactive measures taken by the BB under the new government like further depreciation of Bangladesh Taka against US dollar, increasing flexibility of BDT-USD exchange rate regime by expanding the so-called 'crawling peg mid-band', thereby bringing the exchange rate closer to the informal forex market, etc. have been behind this improved picture of remittance. These steps by BB definitely encouraged expatriate wage earners to send money through official banking channels as it proved more rewarding than before.

Now to sustain the trend of higher remittance inflow, praise for the remitters will not be enough. They don't get any effective protection from the government even when they seek employment through registered recruiting agencies. They are exploited, maltreated and cheated at every step of their journey abroad. Worse yet, as they are mostly manual labourers and do not have much education, officials at Bangladesh's diplomatic missions in the host countries often fail to cooperate at the expected level when expatriate workers approach them for any service. So, alongside a change in attitude on the part of officials, the focus should be more on sending trained and qualified workers and professionals abroad with better-paying jobs so that they may send higher amounts of remittance home. Sooner the government will take these measures, the better the prospect of remittance inflow for improving the reserve situation.