Remittance above $2b again in Aug

Bangladesh received $2.04 billion in remittances for the second consecutive month in the current financial year, giving a respite to the depleting forex reserve buffeting the already struggling economy.

Earlier in July, the country received $2.09 billion in inward remittances, an 11.17 per cent growth compared to the same month of the previous year.

In July and August, the remittance earnings increased by 12.58 per cent, compared to the same period of previous year.

Sources concerned have said the manpower export sector has been experiencing a boom since last year. In the first seven months of this year, more manpower were exported than last year, paving the way to increased remittance flow.

They said the trend is undoubtedly good news for the economy amid the ongoing dollar crisis. However, the difference of dollar prices between the inter-bank exchange rate and the open market should be reduced to encourage remitters.

According to the Bureau of Manpower Employment and Training (BMET) data, Bangladesh exported 6,17,209 manpower last year, which was around four times higher than 2020. During the first six months (January-June) of this year, manpower export was 6,91,017.

In August, the highest $430 million remittances came through the Islami Bank Bangladesh; $141 million through the City Bank; $132 million through the Agrani Bank and $114 million through the Pubali Bank, as per the Bangladesh Bank data.

According to the BB data, about $1.64 billion remittances came through private commercial banks, $363 million through state-run commercial banks and the rest of the amount came through specialised and foreign banks.

Remittance earning had slowed in recent months, mainly due to the gap of US dollar rate between the kerb market and banks. After several months, the remittance earnings crossed $2 billion in July of this year.

Still, there is Tk 8-10 gap of US dollar rate between the kerb markets and banking channels, which prompted Bangladeshi expatriates to use hundi system, an illegal cross border transaction, say Bangladesh Bank officials.

Recently, the Bangladesh Foreign Exchange Dealers’ Association urged the government to increase the cash incentive against wage earners’ remittances to 5 per cent from existing 2.5 per cent.

Despite the growing remittance earnings, the foreign exchange reserves continued to decline. On August 31, the forex reserve stood at $39.05 billion, which was $48 billion in August 24 of the last year.

The forex reserve has declined mainly due to the growing import payment after the Covid-19 pandemic and the ongoing Russia-Ukraine war, as per industry insiders. Import payment increased by 35.95 per cent to $82.49 billion in the last FY22, compared to FY21.