May remittances fall 13%

Money sent home by expatriate Bangladeshis fell by around 13% to $1.88 billion in May this year compared to the corresponding month last year, the central bank said on Wednesday.

The country had received $2.01 billion from the expatriates in April this year, according to the Bangladesh Bank, which means May remittance inflow fell by 6.23% from the previous month.

Bankers said April inflow was particularly high because most Bangladeshis working abroad sent more money to families ahead of Eid-ul-Fitr in the first week of May. Since May as a month was the post-Eid period, remittances dropped slightly.

They also attributed the fall to a surging money flow through illegal "Hundi", as the informal channel with a huge US dollar gap offers more than formal banking, and called for minimising the dollar rate gap.

The country received $19.19 billion as remittances in the 11 months of the current fiscal year (July-May), 15.94% lower than the corresponding period of the previous year.

After dipping for five months in a row in the fiscal 2021-22, remittances started resurging in December and January, but stumbled again in February. The major macroeconomic factor rebounded in March and continued the boost in April to $2.01 billion – the highest in the previous 11 months.

Terming the May fall "concerning" amid a depleting reserve, Centre for Policy Dialogue's Research Director Khondaker Golam Moazzem told The Business Standard that the dollar gap between formal and informal market must be minimised.

"Besides, the current 2.50% incentive on remittances needs to be raised to 3.50% so that Bangladeshi nationals abroad receive the kerb market-like lucrative gains in formal banking channels," he added.

Money transfers through Hundi almost stopped in the 2020-21 fiscal year thanks to raging Covid infections across the globe – causing remittances lodging records throughout the year. Bangladeshi nationals sent a record $24.78 billion home in that year – 36.10% higher compared to the previous year.

The government set a $26 billion remittance target for FY22. However, the country received $19.19 billion in the first 11 months of the current year, which is around 73% of the target.