Inward remittances may cross $17 billion this fiscal: BB

Siddique Islam | Published: August 07, 2018 10:37:45 | Updated: August 08, 2018 14:50:14


The central bank expects the overall inward remittance to cross the $17 billion mark by the end of fiscal year (FY) 2018-19.

Multiple moves are already in place to spur inflows.

"We've estimated considering previous trends and other recent developments like higher oil prices globally," said a senior executive of the regulator on Sunday.

In FY '18, remittance flow jumped by more than 17 per cent or $2.21 billion following higher fuel oil prices in the global market.

This may grow by more than 16 per cent to $17.43 billion from last FY's $14.98 billion, says the latest Monetary Policy Statement (MPS) of the Bangladesh Bank (BB).

Remittance inflows and export growth may sustain their recent performances, driven by global output growth and stronger economic activity in the Middle East for higher oil prices, it projected.

It said the government and the central bank have taken measures to reduce the cost of remittance transfer.

They are working to curb unauthorised intermediaries' role in transferring remittances to support inflows through official channels, the statement added.

The global average cost of sending $200 was 7.1 per cent in the first quarter of 2018, more than twice the Sustainable Development Goal (SDG) target of 3.0 per cent.

"Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post offices and money transfer operators," argued World Bank's Migration and Development Brief.

These factors constrain the introduction of more efficient technologies like internet and smartphone apps and the use of cryptocurrency and blockchain in remittance services, it added.

Meanwhile, remittances to South Asia grew a moderate 5.8 per cent to $117 billion in 2017.

In 2018, the volume is likely to grow modestly by 2.5 per cent to $120 billion, the WB added.

"The upward trend in manpower export in recent years will help achieve the target," hoped the BB executive.

More than 2.32 million workers went abroad with jobs in 2015, 2016 and 2017 calendar years, according to the official figure.

When asked, a senior banker of a leading remittance receiving bank said the target of inward remittance may be receivable if the existing trend continues.

"Remittance inflows from different countries, including South Africa, Jordan and South Korea, witnessed an upswing in recent months," he explained.

However, remittance flows from Saudi Arabia are affected mainly due to regulatory changes in the kingdom, he added.

The official said most of banks are now offering higher rates for remittances to encourage non-resident Bangladeshis to send money through official channels.

Meanwhile, inward remittances fell by more than 5.0 per cent in July, the first month of FY '19, following the Eid-ul-Fitr celebrations.

The remittances from Bangladeshis working abroad were estimated at more than $1.32 billion in July, down by $67.45million from the level of June.

In June, the amount stood at $1.38 billion, according to the central bank statistics.

It was $1.11 billion in July 18.

"Remittance inflow normally drops after Eid-ul-Fitr, the biggest religious festival of Muslims," another BB official explained.

He said the flow of inward remittances is expected to pick up this month ahead of Eid-ul-Azha festival.

The depreciating mode of local currency against US dollar has also helped increase remittance inflows in recent months, he added.

On August 05, the inter-bank exchange rate was Tk 83.75 per dollar, up from Tk 80.66 a year earlier.

Currently, 29 exchange houses are operating globally with 1,211 drawing arrangements to boost inflows, according to the BB official.

All private commercial banks received $972.39 million as remittances in July.

State-owned commercial banks received $320.51 million, foreign commercial banks (FCBs) $12.40 million and specialised banks $11.63 million.

The BB has been encouraging expatriates to send their hard-earned money through banks instead of illegal "hundi" system to help boost foreign exchange reserves.

siddique.islam@gmail.com

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