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The flow of inward remittance jumped more than 18 per cent or US$2.80 billion last year (2019) which may partly be attributed to the incentive provided by the government for sending money through official channels. Depreciation of the local currency against the US dollar has also jacked up the inflow of remittances in the recent months.
Although official figure is yet to be revealed, remittance is set to reach $18.34 billion in 2019 from $15.54 billion a year ago despite a falling trend in outbound jobs of Bangladeshis.
The upward trend of inward remittance is expected to continue in the coming months as the government has announced 2.0 per cent incentive for remittance receipts. The government had already allocated Tk 30.60 billion as incentive in the budget for the current fiscal (FY) 2019-20 to encourage expatriate workers to send their money through legal channels.
What the current trend suggests is that the flow of inward remittance may cross $20 billion-mark by the end of this fiscal. In order to get more remittances, there is a need for strengthening monitoring and supervision to avoid possible misuse of the government incentive.
The local currency depreciated by Tk 1.0 against US dollar in the inter-bank forex market from January 02 to December 19. Earlier on December 18, the local currency appreciated by 2 paisha against the greenback in the inter-bank forex market, after nearly three years.
Meanwhile, the number of overseas employment has registered a declining trend in recent months following slow demand of workers in the Middle Eastern countries. Some 604,060 Bangladeshi workers found jobs in the 11 months up to November 2019 as against 684,962 in the same period of 2018.
In 2018, Bangladesh received $15.5 billion in remittance, up more than 15 per cent year-on-year. In fact, remittances showed a brisk uptick in 2018. The annual receipt was up from $13.5 billion in 2017.
Bangladesh was the third highest recipient of remittance in South Asia last year after India and Pakistan and 11th highest recipient globally.
Last year, Bangladesh's remittance income hit an all-time high, giving a breather to the country's ongoing foreign exchange crisis.
The ongoing depreciating trend of taka against US dollar, a stance taken by the central bank to fight illegal money transfers and the commission offered by banks to remitters were the main reasons behind the spike.
Reducing remittance costs to 3.0 per cent by 2030 is a global target under Sustainable Development Goal 10.7. Remittance costs across many African countries and small islands in the Pacific remain above 10 per cent.
If costs get lowered, remittances are likely to become the largest source of external financing in developing countries. The high costs of money transfers reduce the benefits of migration. Negotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance costs.
Millions of low-skilled migrant workers are vulnerable to recruitment malpractices, including exorbitant recruitment costs. The WB and the International
Labour Organisation are collaborating to develop indicators for worker-paid recruitment costs, to support the SDG of promoting safe, orderly, and regular migration.