Wage earners remittance inflow, one of the key sources of foreign exchange for Bangladesh, rose by 21.38 per cent to $1.93 billion in November, when compared year-on-year.
The amount was $1.59 billion in the same month of previous year, according to Bangladesh Bank data released on Sunday. However, the November figure is 2.52 per cent lower than the October amount of $1.97 billion.
During the first eleven months (January-November) of 2023, the country’s remittance inflow stood at $19.58 billion, compared to $19.94 billion recorded in the same period last year.
Bangladesh posted the lowest remittance inflow in August and September of 2023, raising concerns for the economy.
The inflow stood at $1.34 billion in September 2023 – lowest since the country recorded $1.27 billion back in March 2020. When compared year-on-year, remittance fell by 12.72 per cent or $200 million in that same month. The remittance inflow was $1.59 in August of 2023.
However, after October, there was an opportunity to improve remittance inflow in November, when Bangladesh Bank decided that banks can offer remitters higher rates.
Due to this move, in the initial 10 days of November, the country witnessed a substantial remittance inflow of $794.4 million, only to observe a decline to $698.54 million after 14 days.
This downturn is attributed to the frequent changes in Bangladesh Bank decisions regarding the handling of remittance.
A senior central bank official, speaking on condition of anonymity, expressed surprise at the unexpected drop in remittance after initially reaching $800 million in the first 10 days of November.
The official said, “Most of the banks are still not following the central bank’s directions. Banks are collecting remittance at prices higher than the Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers, Bangladesh (ABB) Ltd rate, triggering inflation.
“Some banks are not being fined as their management can handle the regulator.”
Zahid Hussain, former lead economist of World Bank Dhaka Office, told The Business Post, “We actually have no stable policy. This instability has made the BAFEDA-ABB rate irrelevant. Banks are buying remittances at high prices.
“If stability existed, there would have been a balance in remittance inflow. Market transparency is also required. It should be ensured that banks do not engage in unethical competition.”
He further said, “A large amount of manpower has been exported from Bangladesh after the easing of Covid-19 pandemic. At least $2 billion in remittance are expected to come in every month through formal channels.
“But the amount is not coming because we cannot set a market-based rate for remitters.”
In October, remitters received Tk 112.75, including the government’s 2.5 per cent incentive, as per the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (BAFEDA) decisions, but several banks did not follow this rate, industry insiders say.
According to bank sources, various banks are buying remittance at a rate exceeding Tk 120 from exchange houses. In this situation, the central bank strictly asked the bank to stop buying remittance at higher rates, as they should offer the official rate.
The official rate for remittance is now Tk 109.75. Along with this, a remitter can get 2.5 per cent incentive, and banks will be able to offer another 2.5 per cent incentive. As such, the beneficiary of a remitter is getting a maximum of Tk 115.30 against per USD.
Bangladesh received the lowest amount of remittance since FY21 when the figures are compared to the first five months (July-November) of FY24. The country earned $8.81 billion in remittance during the July-November period, compared to $10.89 billion during the same timeframe of FY21.
It should be noted that Bangladesh exported 11.35 lakh manpower in 2022, which is the highest in history. During January to October this year, around 11 lakh human resources were exported.
However, according to a study by the Refugee and Migratory Movements Research Unit (RAMMRU), 35 per cent of those who went abroad after the Covid-19 crisis later returned home without finding any work.
