Remittance inflow to Bangladesh is expected to reach $23 billion in the current year and will remain there in 2024 as well, according to a World Bank report.
The country’s remittance flow is currently growing at a rate of 7 per cent, said the Migration and Development Brief of the Global Knowledge Partnership on Migration and Development, which is part of the Washington-based global lender.
It said the growth in formal remittances is projected to remain flat on account of the lingering impacts of the recent balance of payment crisis that triggered exchange controls and led to parallel market exchange rate premia.
According to the report, remittance growth is expected to remain stable despite the dollar shortage in Bangladesh, which is needed to pay for imports. The dollar shortage is causing the value of the taka to rise.
It also said that the depreciation of the taka and the government's exchange rate policy are forcing migrant workers to send money through informal channels, such as hundi.
Hundi is an informal money transfer system that is often used to avoid government regulations and taxes.
Meanwhile, remittance inflow reached $1.97 billion in October this year, returning close to the $2 billion mark after two months, according to Bangladesh Bank.
Previously, remittance inflow stood at $1.34 billion in September 2023 – the lowest since the country recorded $1.27 billion back in March 2020.
Remittance is a key source of USD for Bangladesh because a large portion of the export earnings is spent on importing goods for production. Hence, a decrease in remittance inflow means a direct impact on forex reserves.
As such, the government has taken several initiatives to boost remittance inflow. The central bank has doubled the limit of sending remittances through mobile financial services from the existing limit of Tk 1.25 lakh.
The government's Tk 2.5 cash incentive and banks' competitive rates aim to incentivise remittance inflow through the formal banking system.
According to the World Bank, Bangladesh is the seventh highest recipient of remittance in the world with almost $22.1 billion in 2021 and was the third highest recipient of remittance in South Asia.
