Customers receive services at a branch of a bank at Motijheel in the capital Dhaka on Thursday. Banks as well as other offices reopened after the four-day Eid-ul-Fitr holiday. — New Age Photo
Remittances to the country topped $2 billion after 11 months in April on the eve of Eid-ul-Fitr, one of the biggest Muslim holidays, with migrants sending larger sums of money to their loved ones to celebrate the holiday.
The latest data from the Bangladesh Bank showed that remittances stood at $2.01 billion in April.
The inflow of remittances last exceeded the mark in May 2021 when migrants sent $2.17 billion.
The inflow of funds has registered a significant decline in the current fiscal year 2021-2022 amid the resumption of business and economic activities across the country following the removal of strict Covid-centric restrictions.
As demand for dollars in the “curb market” has increased amid a gradual restoration of business activities, remittances through the illegal channel, known as hundi, have also increased.
Thus, the inflow of remittances through the formal channel was declining while business activities were recovering.
Despite the trend, the influx of remittances increased in April ahead of Eid-ul-Fitr, as remittances from migrants to their relatives usually increase on this occasion.
Eid-ul-Fitr was celebrated in the country on May 3.
Last year, Eid-ul-Fitr was celebrated on May 14, 2021, and the influx of funds was greater than the amount received in 2022.
The amount received in May 2021 was $2.17 billion.
In terms of year-on-year remittance inflow, the amount received in April is 2.81% or $58.15 million less than the $2.07 billion inflow in the same month in 2021.
At a recent press briefing on the Asian Development Bank’s Asia Development Outlook (ADO) 2022 launch event, the Senior Economist of the AfDB Resident Mission in Bangladesh, Soon Chan Hong, said expressed optimism about remittances to Bangladesh.
He said the country’s remittances could see a positive sign as an impact of rising oil prices, as a large portion of the country’s remittances come from the Middle East and countries in the region would draw benefit from rising oil prices.
Yet the inflow of remittances in July-April of FY22 remained 16.25% or $3.36 billion lower than the inflow of the same period of FY21.
In the first 10 months of FY21, the inflow of remittances into the country was $20.67 billion compared to an inflow of $17.31 billion during the same period of FY21. current exercise.
The decline in remittances against the increase in import payments in the current fiscal year has created additional strains for the Bangladesh economy.
The country’s current account deficit hit a record $12.83 billion in July-February FY22 from a surplus of $825 million in the same period of FY21.
Due to the decline in inflows against an increase in foreign exchange expenditures, the central bank had to inject more than $4 billion to meet market demand and as a result the country’s import payment capacity declined. deteriorated at an alarming rate.
Bangladesh’s foreign exchange reserve fell to $44.09 billion as of April 30, 2022 after reaching $48 billion in August 2021.
To contain the growing amount of import payments, the central bank had to devalue the local currency and take measures to discourage the import of non-essential items.