The government is likely to allocate Tk 40 billion in the budget for FY 2021-22 to increase the cash incentive on remittance transfers to 3 per cent from the existing 2 per cent amid a steady rise in inward remittance.
In FY 2020-21, the government allocated Tk 30.6 billion for providing a 2 per cent incentive against remittance transfers. The allocation was Tk 30 billion in FY 2019-20.An official of the finance ministry told this correspondent that they were working to increase incentive to 3 per cent in FY 2021-22 to reinforce the efforts to support steady remittance inflow and encourage the use of banking channels in remittance transfers.
Analyzing the trend in remittance inflow after the incentive was introduced, policymakers are now suggesting to increase remittance incentive as an acknowledgement of expatriates’ efforts of sending heard earning remittance to the country, said the official.
Bangladesh’s forex reserves have crossed $45 billion on May 3, 2021, for the first time in the country’s history as the expatriates sent home $2.06 billion in April, a year-on-year increase of 89 per cent.
In the first two days of May, Bangladeshi expatriates have sent $154 million remittances to the country, taking the forex reserve to $45.105 billion.
Bangladesh’s forex reserves have been rising since March 2020 and it crossed another milestone this month despite the Covid-19 pandemic.
According to Bangladesh Bank, forex reserves stood at $37 billion in July, $ 35.85 billion in June, $33.22 billion in May and $32.92 billion in April of 2020.Experts have said the country’s forex reserves have been increasing due to a steady rise in inward remittance and a fall in imports.
Bangladesh’s remittance inflow grew up by 39 per cent to $20.67 billion in the first 10 months (July-April) of the current fiscal year. The country did not register a remittance inflow of over $20 billion in a single fiscal year in the past.
The government introduced 2 per cent cash incentive on remittance transfers in FY20.
The banks through which remittances come to the country pay 2 per cent cash to the remittance recipients. This 2 per cent incentive is later paid by the government as a subsidy to the banks.
Besides, several banks have been providing an additional 1 per cent incentive from their own fund in addition to this 2 per cent cash incentive.