Remittance from wage earners rebounds with a nearly 30-percent rise to US$1.98 billion recorded in October year on year, at a time when Bangladesh greatly needs foreign exchange to replenish reserves.
This monthly receipt is the highest in four months, according to Bangladesh Bank data.
Earlier in September 2023, remittance inflow had hit a 41-month low at $1.34 billion since April 2020 when it was only $1.09 billion.
People familiar with the matter said the inflow in October increased from the mark of September receipt by riding on social programmes, especially weddings, Durga Puja, and the revised dollar-Taka exchange rate by BAFEDA or Bangladesh Foreign Exchange Dealers Association.
The remitters now receive an additional incentive of 2.50 per cent from banks apart from the government's existing cash support worth as much, as banks have stepped up efforts to give a much-needed fillip to remittance earnings and mitigate the foreign-exchange crisis.
The BAFEDA and the Association of Bankers, Bangladesh (ABB) made the decision in a joint meeting on October 20-amid reports that dollars divert their course into high-paying informal channels.
To attract remittances, the government had introduced a 2.0-percent incentive in 2019 and later raised it to 2.5 per cent. Now the banks would provide up to 2.5 per cent from their own coffers as bets to net the greenback.
Remittance is the cheapest source of US dollar for Bangladesh and is a key pillar of the economy. But inflows dropped in September despite a record outflow of workers in recent times.
The US currency has been gaining against the taka for the past one and a half years amid depleting foreign-exchange reserves, driven by higher import bills against lower-than-expected remittance and export receipts.
However, many say this is still less than expectation as more than 1.1 million Bangladeshis left the country for jobs abroad last year. They say remittance has not been received as expected due to a higher dollar rate on the informal market.
Migrant workers sent $21.61 billion in 2022-23, which was $21.03 billion a year ago, the central-bank data showed.
However, private commercial banks attracted much of the inflow as remittances came into the country worth $1.76 billion through them.
Islami Bank as usual was the biggest one in channeling the remittance as it handled $316 million alone.
"The increase in remittances sent home by Bangladeshi migrants during October is a healthy development for a country battling high inflation, dwindling reserves," one central banker told the FE
The market is expecting a further spike in remittances around November and December, he said.
"It will help stabilise the foreign-exchange reserves that dropped to less than $21 billion as per latest IMF formula. Nonetheless, remittances in the first four months of this fiscal year dropped by more than 4.0 per cent to $6.883 billion on a year-over-year basis.
Market players blame the situation on large informal market or 'hundi'.
jasimharoon@yahoo.com
