The amount of remittance rose by 33.51 per cent or $4.19 billion in eight months (July-February) of the current fiscal year 2020-21 compared with that in the same period of the previous fiscal year.
Experts said that the inflow of remittance increased due mainly to the sending of enhanced financial support by expatriates to their relatives amid the COVID-19 outbreak.
According to the latest Bangladesh Bank data, the country received $16.69 billion in remittance in July-February of FY21 against $12.5 billion received in the same period of FY 2019-2020.
With the growing inflow of remittance, the country’s foreign exchange reserve reached a record high of $44.03 billion on February 25, 2021.
The country’s reserve has increased by $11 billion since the outbreak of coronavirus.
On December 30, 2020, finance minister AHM Mustafa Kamal said that the issuance of 2 per cent incentive against remittance was a major reason for the surge.
Economists, however, mentioned some other reasons apart from the incentive factor for the rise.
Policy Research Institute executive director Ahsan H Mansur had told New Age that in a broad sense, there were three reasons for the surge in remittance inflow to the country.
‘Firstly, many expatriates have sent money in higher amounts to the country to support their economically distressed relatives following the coronavirus outbreak and flooding in different parts of the country in the past year.’
Secondly, deposit rates, especially against investments in national savings certificates, are higher compared with deposit rates in other countries that has prompted many expatriates to send higher amounts of money to invest those in the savings tools in the country, said Mansur, adding that the two factors would continue to contribute to attainment of higher amounts of remittance in the coming days until the situation changes.
Finally, the issuance of 3 per cent cash incentive, 2 per cent by the government and another 1 per cent by some banks, encouraged expatriates to use the banking channel instead of informal channels in sending their money to the country, he said.
The scope for money laundering has become narrow due to the COVID-centric restrictions on movement for which demand for cash dollars on the curve market abroad has dried up after the outbreak of coronavirus, said Mansur, also the chairman of BRAC Bank.
As a result of the fall in demand, illegal money traders were offering lower dollar value, making money sending to the country through illegal channels less attractive, he said.
Even though the country’s remittance inflow increased in the eight months of the current fiscal year, the volume of remittance dropped in February compared with that in the previous month.
In February, remittance dropped by 9.24 per cent, or $181 million, to $1.78 billion against $1.96 billion in January.
Of the banks, Islami Bank Bangladesh brought the highest $511 million in remittance to the country in February.
Dutch-Bangla Bank was the second highest remittance disbursement entity with the receiving of the bank reached $240 million and Agrani Bank received the third highest $170 million from remitters in the month.
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