Remittance flat at $22b despite record worker outflow
Bangladesh received $22.07 billion in remittance in 2022, almost unchanged from a year earlier, although a record number of workers went abroad for jobs in the just-concluding year, Bangladesh Bank data showed yesterday.
It was 3.67 per cent higher than the $21.29 billion flown to the country in 2021. It stood at $21.74 billion in the previous year.
State-run Bureau of Manpower, Employment and Training (BMET) put remittance earnings at $22.07 billion in 2022.
Last year's receipts, however, beat the World Bank's projection. Recently, the Washington-based lender said Bangladesh is projected to receive $21 billion in remittances in 2022 from $22 billion a year earlier.
The country fetched $1.7 billion in remittance in December, up 4.29 per cent year-on-year and the highest in four months.
The tepid growth in the funds transferred by migrant workers came although 2022 likely saw the highest number of migrant workers leaving the country as oil-rich economies rebounded strongly for the higher commodity prices.
As of November, more than 10.29 lakh people went to other countries in search of jobs, BMET data showed. In 2022, more than 11 lakh people might have found jobs abroad, sources said.
"From that point of view, 2022 was a remarkable year," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office, on Thursday.
The previous high was registered in 2017 when 10.08 lakh Bangladeshis found jobs in other countries.
With a view to encouraging remittance through legal channels, the government hiked the rate of incentives by 0.5 percentage points to 2.5 per cent in January last year.
The government also withdrew the mandatory provisions for the submission of earning documents of the remitters in the case of availing cash incentives against remittances exceeding the amount of $5,000.
Still, the remittance has not picked up proportionately as workers reportedly send half of their money to the beneficiaries back home using informal channels owing to the better rates of the US dollar offered by hundi operators, depriving the country of much-needed American greenback.
Experts say unofficial channels are attractive to migrant workers since they can send money easily and receive better rates. The exchange rate gap between the formal and informal channels is also to blame.
And even before the pandemic and the latest volatility in the foreign exchange market, only 51 per cent of the remittances used to flow to Bangladesh through formal ways and the rest through hundi, a cross-border illegal money transfer system.
And Zahid Hussain estimated that Bangladesh is losing at least half a billion US dollars in remittance to informal channels every month because of the multiple exchange rates.
"Bangladesh is running after $4.5 billion from the International Monetary Fund over the three-year period but if the country makes just one reform, $6 billion would flow into the country every year," he said.
"We need a market-based uniform rate of the buying and selling of the US dollar."
Bangladesh maintains different dollar rates for exporters, importers, exchange houses, and remitters.
Hussain said migrant workers have gone to the countries where economies are booming for the price hikes in commodities and inflation is ranging at 3 to 5 per cent.
"So, their capacity to send remittance has not declined."
Selim Raihan, executive director of the South Asian Network on Economic Modeling, also pointed to hundi for the lower remittance flow.
"Remitters are sending money through the informal channels for the higher dollar rate. Money launderers and their agents are taking advantage of the situation," he said.
Prof Raihan also called for removing the multiple exchange rates and setting a uniform one in order to give a boost to the flow of remittance via official channels.
Remittances sent home by more than 1.2 crore Bangladeshis living abroad represent 4.6 per cent of the gross domestic product and are an important pillar of the economy.
As the remittance flow has been low in recent months, the international currency reserves have received a hit amid escalated imports and moderate exports.
Reserves fell to $33.84 billion on December 28 last year from $46.15 billion in the same month a year ago, BB data showed.
Bangladesh is the seventh-highest recipient of money transferred by migrant workers.