Reports indicate an encouraging trend in financial flows back to Bangladesh through remittances, a much-needed respite for a nation confronted with myriad difficulties such as dwindling foreign exchange reserves and external payment stress. Data from the central bank reveal that the amount of money sent back by Bangladesh’s overseas personnel escalated by 21.31 percent year-over-year to reach $2.39 billion in October, tracing its path from a 40 percent augment in August and an 80 percent surge in September.
Looking into the monetary inflow spanning from July to October in fiscal 2024-25, we see a stark improvement of 30 percent from the previous year, bringing the total to an impressive $8.93 billion, a healthy jump from the previous year’s $6.87 billion in the same span according to Central Bank’s records.
Jamuna Bank’s Managing Director, Mirza Elias Uddin Ahmed, believes this increasing trend of remittance receipt will help alleviate the strain on the nation’s foreign reserves. He expressed his optimism that the trend will persist in foreseeable future, given the enhanced ability of Bangladeshi expatriates to remit more funds home due to the falling prices of commodities worldwide.
Nevertheless, a senior official from the central bank, wishing to remain anonymous, attributed this dramatic increase in remittances to fluctuations in the foreign exchange market during the same period last year. These fluctuations, according to the official, forced reduced remittances through the standard channels.
Moreover, central bank reports indicate that some banks received significantly more remittances than others. Between October 1st and 26th, Islami Bank Bangladesh topped the list with a staggering $371 million, Agrani Bank followed with $185 million, and Sonali Bank and BRAC Bank rounded off the list with $143 million and $122 million, respectively.
The flow of remittances from Bangladeshi expatriates has remained robust since April of this year, with the only exception being July, which saw a decline. A government-imposed internet blackout provoked by demonstrations over civil service job quotas under the auspices of the Awami League government led by Sheikh Hasina has been attributed as the cause of this dip.
Mustafa K Mujeri, the executive director of the Institute for Inclusive Finance and Development, voiced his satisfaction with the sustained rise in remittances. He did, however, express his concern that both remittances and export earnings would need to maintain their upward trajectory to counterbalance the ongoing pressure on the country’s foreign exchange coffers.
July and August of this fiscal year witnessed Bangladesh’s export performance growing at a modest pace of only 2.5 percent on a yearly basis. Mujeri has proposed that the government invest call for the identification of new markets and take decisive steps to curb the illegal remittance tool known as ‘hundi’.
The number of Bangladeshi laborers working abroad appears to be on the decline, according to data from the Bureau of Manpower Employment and Training. The figure stood at 698,558 between January to September this year, a decrease from 989,685 during the same period last year.
Statistics from fiscal year 24 point to a remittance inflow of $23.91 billion, signifying an upturn from the preceding year’s $21.61 billion, according to data from the country’s central bank. The numbers from the central bank also shed light on the country’s foreign exchange reserves, which have declined to $19.87 billion (BPM6) as of October 30 this year, from $20.70 billion (BPM6) at the same period last year.
Following a spike to an all-time record of $48 billion in August 2021, Bangladesh’s foreign exchange reserves have been seen a downward trend. There is, unfortunately, a host of external factors that have contributed to the decline. These include global economic downtime, irregularities in Bangladesh’s foreign exchange market, frequent revisions of monetary policy by the central bank, and a discrepancy between the official and the black-market exchange rates.
Since 2021, the central bank has attempted to arrest the decline by injecting approximately $27 billion from its reserves into the market. While this action may seem drastic, it is an evident reaction to an economic landscape characterized by volatility. The country needs a continuous rise in foreign capital to maintain the reserves and alleviate the existing pressures on it.