Tuesday, 27 September, 2022

Increased remittance: A healthy sign

Bangladeshi migrant workers have sent over $2 billion in each of the first two months of the current fiscal year. The latest data released on Thursday showed that August month’s total remittance stood at Tk. 193.59 billion, if converted to local currency at Tk95 exchange rate. It is indeed a promising sign for the country’s economy! Healthy remittance inflow has been possible due to the pragmatic steps taken by the government that provides 2.5 percent cash incentive for sending the remittance through formal banking channel instead of illegal money transfer channels. The official move has significantly increased foreign remittances.

Presently, the rise in import payments due to global price hikes has hit the country’s foreign exchange reserves. Rising remittances would undoubtedly reduce pressure on the reserves to some extent. However, according to a prominent economist of the country, the reserves are still sliding due to high import payments against the slower-than-expected export earnings. In this situation, the upward trend of remittance inflow should be maintained through cautious moves. A former Bangladesh Bank governor blamed money laundering for the falling reserve level. He suggested strict actions against the money launderers. The authorities concerned should take note of his valuable suggestion.

However, banks should provide prompt service by handing over the money to the receivers directly, if law permits. In that case the expatriate workers will feel more encouraged to send money through proper channels. Ultimately, both the country and the expatriate workers will be immensely benefited. Further steps should be taken to maintain the healthy trend. The policy measures taken by the central bank should continue in the coming days. At the same time, the government should take measures to strengthen remittance inflow. If possible its cash incentives might be increased further.

As per analysts, the foreign exchange market is still facing pressure, but the stress will be lessened if the ongoing trend of remittances continues in the next couple of months. In such a situation, both the government and the central bank should give additional efforts to enhance remittances. They must step up their oversight on the remittance inflow channels.