Remittance rises by 10% in February

Inward remittance has been rising since July last year when the government offered a 2 percent cash incentive to encourage inflow through formal channels.

The latest data released by the Bangladesh Bank on Sunday showed that remittance increased 10 percent year-on-year to $1.45 billion in February.

The inflow during the first eight months of the current fiscal year was 20 percent higher at nearly $12.50 billion from the corresponding period of the previous fiscal year.

However, February's receipts were 2.88 percent lower than that of January.

Officials at the central bank said remittance inflow kept its strong growth since the government had announced the cash subsidy in the budget for the current fiscal year and allocated Tk3,060 crore to meet the expenses.

Among all economic indicators, only remittance has remained upbeat for several months, giving Bangladesh breathing room in managing the current account balance and the exchange rate.

In the first seven months of the current fiscal year, export and import fell by 5.21 percent and 2.13 percent respectively, according to central bank data.

Despite a drop in manpower export, an increase in the US dollar price and the cash incentive kept the remittance growth strong, said a senior executive of the Bangladesh Bank.

The exchange rate rose to Tk84.90 against a dollar in January this year from Tk83.95 in the same month of 2019, central bank data shows.

Backed by strong remittance inflow, the current account balance deficit narrowed to $1.34 billion in the July-December period of the 2019-20 fiscal year from $3.38 billion in the same period of the previous fiscal year.

The Bangladesh Bank, in its latest revised monetary statement for the second half of the current fiscal year, has expressed hope for the continuation of an upward remittance inflow in the future.

Although the export-import growth remains down, a strong inflow of remittance will keep the overall trade balance at a surplus of $410 million at the end of this fiscal year, according to the Monetary Policy Statement for this fiscal year.

In the first half of the 2019-20 fiscal year, the overall trade balance remained at a surplus of $27 million, according to central bank data.