Bangladeshis working abroad are expected to send huge money back home over the next three fiscal years helping the country’s foreign currency reserve to hit USD 53.99 billion by the middle of 2023-24 fiscal year.
The government projects over a 12 percent increase on average in the inflow of remittance, the key driver of the country’s more than $409 billion economy, over the next three fiscal years, including the current one.
According to a Finance Ministry document obtained by UNB, the remittance inflow of 2019-20, 2020-21 and 2021-22 was 11.2 percent and 36 percent while the target for the current 2021-22 fiscal is 15 percent with a projection of 12 percent and 10 percent for 2022-23 and 2023-24 fiscals respectively.
The document reveals that the foreign exchange reserve was USD 36.04 billion and USD 44 billion in 2019-20 fiscal and 2020-21 fiscal respectively while the target for the current 2021-22 fiscal is USD 48.37 billion with projection of having USD 50.74 billion and USD 53.99 billion for 2022-23 fiscal and 2023-24 fiscal respectively.
For a developing and emerging economy, the role of foreign remittances has always been crucial. In the context of Bangladesh, foreign remittances are expected to help reduce the current account deficit and augment GDP growth by stimulating domestic demands, the document says.
On the other hand, it says, the micro-level context shows that remittance inflows affect the lifestyle of the household as well as increase the saving level that can serve as an important source of capital.
The document mentions that the government has taken several initiatives to increase remittance inflows as well as foreign employment.
The initiatives include providing cash incentives for sending remittances through banking channels, simplification of remittance-related rules and regulations, reduction in administrative costs for sending remittances through financial institutions and exploration of new market sources for manpower export.
The official remittance inflows began going up in the 2020-21 fiscal despite global and domestic impacts of the Covid-19 pandemic. The total inflow of foreign remittances during the 2020-21 fiscal was $24.77 billion which is 36 percent higher than the same period of the previous fiscal year.
According to the document, the current account deficit widened in the 2019-20 fiscal due to weak exports before moving into surplus in the 2020-21 fiscal, supported by a surge in official remittance inflows.