Remittance rebounds

Remittance rebounded in Bangladesh in the outgoing financial year, extending some breathing space to an economy struggling to keep its head above water amid the lingering crisis at home and abroad. 

Families and relatives received $2.02 billion in the first 25 days of June from their breadwinners toiling abroad, up more than 57 per cent from the $1.28 billion that was received in the first 23 days of the same month last year, data from the central bank showed.

June's receipts were the highest in three months and equal March's earnings. However, if the inflow goes up by a small margin in the last five days of June, the takings would be the highest in a single month in two years. 

This month's remittance also lifted the earnings to $21.43 billion between July 1 and June 25, up 4.6 per cent year-on-year, comfortably going past last fiscal year's total of $21.03 billion.

Families and relatives received $2.02 billion in the first 25 days of June from their breadwinners abroad.

The current pace of growth of 4.6 per cent is much higher than the 2 per cent uptick estimated by the central bank for 2022-23. The overall earnings will be $21.45 billion in the year, said the BB in its latest monetary policy statement. 

Remittance flow usually goes up ahead of major occasions such as Eid-ul-Fitr and Eid-ul-Azha as remitters send a higher amount to help their families celebrate the festivals. Eid-ul-Azha will be celebrated on Thursday, a time when about one crore animals are expected to be sacrificed.

The latest increase in remittance comes as the government says 10.74 lakh migrant workers have left Bangladesh for jobs abroad so far in FY23, the highest in a single year.

The number of workers who went overseas between July 1 and June 15 saw an increase of 18.50 per cent compared to the same period a year ago, Expatriates' Welfare Minister Imran Ahmad told parliament yesterday. In 2021-22, some 9.07 lakh migrant workers went abroad.

Remittance sent by expatriate workers is considered one of the driving forces of the economy. But the funds transferred by the migrant labourers have not surged in line with their record outflow.

Local economists and multilateral lenders have pointed to the multiple exchange rates and the better rates of the USD available in the hundi market for the lower-than-expected flow of remittance through official channels.

A number of people living abroad say beneficiaries in Bangladesh usually receive 3 to 5 per cent better rate when they transfer funds through the hundi cartel, an illegal cross-border financial transaction system.

Neither remitters nor beneficiaries have to face any hassles in sending or receiving money, said one person.

About half of all remittance entered the country through unofficial platforms even before the coronavirus pandemic, according to an estimate of the government. 

A wide gap in formal and informal exchange rate has been one of the factors behind the sharp fall in the foreign exchange reserves in Bangladesh as it shifts remittances from official channels to unofficial routes and impedes repatriation of export proceeds, said the World Bank last month.

In Bangladesh, a one-per cent deviation between the formal and informal exchange rate shifts 3.6 per cent of remittances from the formal to the informal financial sector, said the global lender.

In order to encourage the use of formal channels in sending remittances, the government provides a 2.5 per cent incentive and has introduced remitter-friendly processes, including the use of mobile financial services.

Besides, all fees required for sending remittances through the Bangladeshi banks and exchange houses have been exempted.

Owing to a lower flow of remittance, the cheapest source of US dollars for Bangladesh, and a moderate export, the country's foreign currency reserves fell sharply in recent months amid escalated import bills, fuelled by a surge in global commodity prices. 

At present, more than 1.49 crore Bangladeshi migrants are working in 176 countries, according to budget documents.

Bangladesh received the highest-ever of $24.77 billion in remittance in 2020-21, posting a staggering 36.10 per cent year-on-year growth.

Speaking in the parliament, the expatriates' welfare minister also said there is a plan to sign agreements with a number of countries for the purpose of exporting manpower. The nations include Libya, Malta, Albania, Romania, and Serbia.

Since the establishment of Expatriate Welfare Bank, around 1.14 lakh expatriate workers have received Tk 2,081 crore in loans for migration purposes, he added.