• Thursday, Aug 11, 2022
  • Last Update : 04:24 pm

Remittances, forex reserves hit record highs

  • Published at 09:45 pm July 2nd, 2020
A bank employee counts US dollar notes in this file photo from May 16, 2016 Reuters

The remittance had hit the new record due mainly to the 2% incentive on inward remittance

Remittance inflow hit a new record of $18.20 billion in the just concluding fiscal year, although coronavirus pandemic battered most of the global economies.

The inbound remittance surged by 10.87% to $18.20 billion in the last fiscal year, as a 35% growth registered last month.

The inflow of remittance reached a new height of $1.83 billion in June. Previously, the highest amount of remittance amounting to $1.74 billion was in May last year, according to the data of the Bangladesh Bank (BB).

Meanwhile, foreign exchange reserves also hit all-time high, setting a record of over $36 billion amid coronavirus pandemic.

The surging inbound remittance and enhanced aid from developing partners contributed to the rise in the forex reserve to $36.14 billion on July 02, says a high official at the central bank on Thursday.

He says lackluster import amid the coronavirus has also helped reserve to rise, as import industrial raw materials and capital machinery is negligible in the last three months.

It is possible to meet the import payment of eight months by the current foreign currency reserve, says an expert.

The remittance had hit the new record due mainly to the 2% incentive on inward remittance, said the BB’s executive director Kazi Sayedur Rahman.

The objectives of the incentive, launched in July last year, had been to mitigate the burden of increased expenses in sending foreign remittance and to encourage Bangladeshi diasporas to remit more money through legal channels, he added.

The government allocated Tk3,060 crore in incentive against remittance for the last 2019-20 fiscal year. For the current 2020-21 fiscal year, the government would also incentivize the remitters at the similar rate, a senior finance ministry official said.

In FY2018-19, the country received $16.41 billion in remittance. The figure was $14.98 billion for 2017-18 fiscal year. 

“Although, the Bangladeshi expatriates are facing various disruptions due to the struggling economies they reside, but they did not stop sending money to their relatives in the country. As a result, the inflow of remittance has increased in June,” Dr Zaid Bakht, Chairman, Agrani Bank limited, told Dhaka Tribune.

Bangladesh forex reserve also hit a new record of $36 billion on June 23, thanks to the surging remittance and the foreign aid inflow. However, experts said the growth of remittance and forex reserve would not sustain in the upcoming days due to the consequences arising from new virus.

Talking to Dhaka Tribune, Policy Research Institute executive director Ahsan H Mansur, said: “The amount of money the Bangladeshi expatriates have sent during this pandemic, was not of their recent income. “

“The reason they sent such a huge sum of remittance was out of their fear that they might have to return home in the near the future as many of those who work in the Middle Eastern countries have lost their jobs due to a significant decline in oil prices.” 

“A good number of migrant workers will lose their jobs and return to Bangladesh from different countries owing to the worldwide crisis created by the Covid-19 pandemic,” he added.

According to government estimation, over 0.1 million Bangladeshi workers returned home jobless so far since the outbreak of novel coronavirus in early March.

The inflow of remittance declined 14.01% year on year to $1.50 billion in May as the coronavirus pandemic took a toll, as per central bank data.

A large number of Bangladeshi migrants became jobless in Saudi Arabia, the UAE, Kuwait, Oman, Bahrain and the Maldives due to the economic recession.

Besides, many Bangladeshi migrants in European countries became jobless also due to the Corona outbreak, said industry insiders.

Currently, there are over 1.02 crore Bangladeshis working in 174 countries across the world.