Bangladesh received the highest remittance from the United States during July-December in the fiscal year (FY) 2022-23 for the first time since independence as the remittance earning has been dominated by the Middle Eastern countries.
In the first six months of the current fiscal year 2022-23, expatriates sent $1.97 billion remittances to Bangladesh from the USA while $1.91 billion came from Saudi Arabia.
In four months of the first six months of the current fiscal year, higher remittances have come from the United States than from Saudi Arabia. The gap is highest in the last month of December.
In the last month (December), remittances increased by about 40 percent to stand at $428.30 million from the USA against $306.4 million from Saudi Arabia.
Dr Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI), said, “All the remittances sent by expatriates from the United States to the country are sent through banking channels. There is no opportunity to send money from that country to the country through illegal hundi.”
However, expatriates have always been sending money to the country through hundi from Middle East countries including Saudi Arabia.
“It has increased recently as the dollar is much more expensive in the curb market than in the bank. That is why remittances from Saudi are decreasing and from the United States are increasing,” he mentioned.
Dr Zahid Hussain, a former lead economist of the World Bank's Dhaka office, told Bangladesh Post that imposing multiple exchange rates for exporters, importers and inward remittance is the key reason for encouraging expatriates to send money through hundi which pushed down remittances.
“If a Bangladeshi expatriate in an overseas country sends foreign exchange to Bangladesh through an exchange house, his family will get money at Tk 108 against one USD from the exchange house and Tk 99 from the banks and non-banking institutions. At the same time, he can get Tk 112-116 in the informal channel,” he mentioned.
Mohammad Abul Bashar, president of the Bangladesh Association of International Recruiting Agencies (BAIRA), said, “We have sent 1.5 million people abroad. But it is sad that remittances are not increasing even though the export of manpower is increasing. The main reason for this is hundi. Illegal hundi activities were stopped worldwide due to the shutdown of everything for the Corona pandemic. But since the Corona situation normalized, Hundi activities have started again. It has increased in recent times due to volatility in the dollar market.”
However, despite a record in manpower exports, remittance flows from expatriates, one of the main sources of foreign exchange reserves, have declined in the last year.
Bangladesh received $21.28 billion inward remittance in December 2022 through the banking channel, down by 3.56 percent compared to the previous year.
On the other hand, 1.15 million people have gone to different countries for work in 2022, surpassing all previous records which was 86.32 percent more than the previous year amounting 6.17 lakh in 2021.
Experts and economists said that because the price of the dollar is higher in the open market or the curb market than in banks, remittances have decreased as expatriates send money to the country through illegal hundi as they get more money.
Meanwhile, remittances increased by 4.23 percent to stand $1.70 billion in December 2022 over the same period of previous year.
However, till last November 30, the reserves, the most important indicator of the economy, dropped to $33.86 billion, falling below $34 billion.
In the past few days it has increased again to cross $34 billion to stand at $34.13 billion till December 27, according to BB data.
On August 24 last year, the reserves crossed the $48 billion milestone, surpassing all past records.
