With a 40% growth over the July-May period of the fiscal 2019-20, the country received $22.84 billion in remittances in the first 11 months of the current fiscal year despite the coronavirus pandemic that is ravaging economies.
Except for February, the expatriates remitted $2 billion a month on an average.
A Bangladesh Bank report Tuesday said the country received $2.17 billion in remittances in May – which is 44% more than the corresponding period of the previous year.
In the first 11 months of FY2019-20, the remittance inflows amounted to $16.37 billion, while the inward remittances in that year stood at $18.21 billion, clocking in a 11% year-on-year growth.
According to the central bank report, remittances in 11 months of this year have already surpassed the previous year's money transfers from migrants by $4.6 billion.
Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), thinks the government's 2% incentive on remittance through official channels and the pandemic-led suspension of illegal means of remittance transactions such as hundi contributed to the remittance surge.
Remittances would cross $25 billion by the end of June, noting so, Prof Mustafizur said the expatriates sent more money to their families in May comparing to April centring the Ramadan and the Eid-ul-Fitr, and the remittance stream may continue for two more months ahead of the Eid-ul-Adha.
"High remittance inflow may stumble after the Eid-ul-Adha," he commented. To keep the inflow steady, Prof Mustafizur advocated for sending more workers to overseas manpower markets, slashing the migration costs and allocating enough funds in the upcoming budget to continue the 2% incentive facility for retrieving.
Forex reserves hit record high $45.05bn
Due to the upward trend of remittances, the country's foreign exchange reserves on 31 May hit a new record of $45.05 billion.
Earlier on 3 May, the reserves – one of the major macroeconomic indicators of an economy – touched the $45 billion mark – $45.1 billion to be exact. The pressure of import payments dragged down the figure to $44 billion on the very next day.
With the current reserves, Bangladesh can meet import payments for eight months. The three-month import payment threshold is the minimum level of reserve adequacy in normal times.
As Taka is supposed to be stronger against the US dollar due to the burgeoned forex reserves, the central bank is buying additional amounts of dollars from the foreign exchange market to maintain stability of the exchange rate.
Besides, the government with the reserves has formed an infrastructural development fund. The central bank recently has approved the government to lend Sri Lanka $200 million from the reserves.
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