Remittance up slightly

Remittance inflow made a slight year-on-year increase in the just concluded year in spite of the flow being slow in the last couple of months.

Expatriate Bangladeshis sent $22.07 billion last year, up 1.52 per cent year-on-year, according to data from Bangladesh Bank.

But experts said there was no scope for complacency as remittance recorded a substantial decline in recent months.

Remittances narrowed 21 per cent year-on-year to $10.23 billion in the second half of 2021.

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the slight increase last year did not reflect the actual scenario.

Declining trend of remittances is a normal phenomenon given the opening of the global economy, he said.

The global economy had faced shutdowns as many countries imposed lockdown to contain the Covid-19.

Hundi, an illegal cross-border transaction settlement system, is mainly responsible for the downward trend.

The cartel was forced to stop its activities during the peak of the pandemic because of the lockdown.

But the money launderers have started their activities once again in recent times keeping with the rolling of the global economy.

Mansur said a latest government decision to increase the subsidy on remittances might have little positive impact.

As per the government decision, a 2.5 per cent incentive can be enjoyed on the amount of the remittance sent from this month whereas it was previously 2 per cent.

The difference in the exchange rate between the interbank and informal sector is around Tk 5, encouraging remitters to send their money through informal sector.

The interbank exchange rate stood at Tk 85.80 per dollar yesterday, which was surpassed by Tk 90 in the carb market, the informal market where traders buy and sell foreign exchange illegally.

If the central bank depreciate the local currency by Tk 3 against the dollar instead of providing subsidy, remitters will feel more comfortable to send their hard-earned money through formal channels, Mansur said.

Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said the government should beef up monitoring in containing diversion of expatriate earnings from banking channels to informal ones.

The amount of remittance received in the first six months of this fiscal year is still higher than the pre-pandemic level, which is a positive sign, he said.

He, however, said the latest decision to increase subsidy would have a positive impact on remittances.

Manpower export has recently increased, which will play a positive role in pushing up remittance in the days ahead, he said.