Inward remittances have gone past the $2-billion mark again in April this year, after going slightly down in January.
Money sent home by migrant Bangladeshis was above $2 billion for four straight months till December of the current 2020-2021 fiscal year.
According to data provided by the Bangladesh Bank, the country's remittance income last month stood at $2.07 billion – almost double the previous April's figure of $1.09 billion.
Meanwhile, the total remittance inflows in the first 10 months of the current financial year i.e. July-April amounted to $20.67 billion – 39% more than that earned in the same period of last fiscal.
In the July-April period of FY20, migrant Bangladeshis remitted $14.87 billion.
Asked about the rising trend in remittance inflows, Dr Tasneem Siddiqui, founding chairman of the Refugee and Migratory Movements Research Unit (RMMRU), told The Business Standard that even though some of the expatriate workers have returned home amid the pandemic, the number of returnees is actually very low compared to those who are still abroad.
"On the other hand, expatriates have increased remitting money through the formal channel. They do not have any other option either, as the global hundi cartel has turned ineffective amid the pandemic," he added.
About hundi's turning ineffective, he said remittances through hundi that were carried out earlier by overvaluing imported goods have stopped, since imports are low due to the business slowdown in the country.
The declining gold smuggling and visa trade also have played a part in this, he continued, adding the 2% incentive on remittance is also contributing to the increased remittance inflows.
Even then, he thinks there should be more research on the high growth of remittances.
Dr Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told The Business Standard that expatriates are sending more money to the country ahead of Ramadan and Eid, raising remittance income.
Regarding the almost 100% growth in remittance income year-on-year in April this year, he said the only reason for this was the stopping of remittance inflow through illegal channels.
He, however, predicted that remittance inflows will decrease after forthcoming Eid-ul-Adha.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), came up with a similar observation.
He said the high inflow of remittances is not sustainable. "Once the situation returns to normalcy, the amount will come down."
Mustafizur Rahman said, "News is there that the government will increase the incentive rate against remittances to 4%. If this is finalised, the government will have to increase spending on remittance incentives."
This economist suggested that arrangements be made for generating employment opportunities for those who have returned home from foreign countries during the pandemic.
According to a report published by the private development agency BRAC on 1 May, 5 lakh Bangladeshis have returned from abroad between March 2020 and April this year and 47% of them are now unemployed.
Unable to find work, they are in a state of social and emotional turmoil, the report says.
Meanwhile, the robust inward remittances are also boosting the country's foreign exchange reserves.
According to central bank sources, forex reserves stood at $44.95 billion last Thursday (29 April).
If no major import expenditure was paid on Sunday, Bangladesh's foreign exchange reserves, for the first time, reached $45 billion for the first time on that very day. This can be confirmed today.
On 8 October last year, the reserves reached the $40-billion mark. Then, on 24 February this year, the reserves exceeded $44 billion.
In this context, Mustafizur Rahman said capital machineries are hardly being imported for investment, which is leaving an impact on the reserves. "It is not correct to say that the macro economy will remain stable only if the reserves increase. Instead, we need to aim at increasing investment."
On the other hand, Ahsan H Mansur observed, "People stopped going abroad because of coronavirus-induced restrictions. Besides, many are not being able to go to Singapore, Thailand or even India for treatment. As a result, a large amount of foreign exchange is not being spent, which is helping the reserves swell."