Migration of skilled workers also contributes to the rise
Inward remittances continue to rise so far this fiscal year riding on an economic recovery in developed countries.
Despite shrinking exchange rate benefits, migrant workers sent home nearly $4 billion during July-September — a rise by around 22 percent year-on-year, according to Bangladesh Bank.
Month-wise, remittances grew 28.63 percent to $1.32 billion in September compared to the same month a year ago.
September’s inflow was also higher by 12.34 percent than that of August.
In July, expatriates sent $1.49 billion, the highest in a single month in Bangladesh’s history.
Analysts said Eid-ul-Azha had a role in the rise in remittances, but there were other factors that fuelled the inflow in recent months.
“Remittances got a boost from economic recovery in major nations (the USA and European countries),” said Mustafizur Rahman, executive director of the Centre for Policy Dialogue.
Rahman attributed the growth to three factors: a rise in migration of skilled workers, legalisation of workers in Saudi Arabia and revision of workers’ pay-scale in the Middle East.
Labour migration to regional markets, including Malaysia and South Korea, is also on the rise, he said. “Bangladesh is sending more skilled manpower abroad.”
Zaid Bakht, research director of Bangladesh Institute of Development Studies, said the overall inflow has started picking up after a 1.61 percent negative growth in the last fiscal year.
“Eid festivals had a role in this rise in July and September,” he said.
Increased efforts made by banks have helped the country get more remittances despite less benefit in exchange rates, he added.
“Presently, the remitters get better rates in informal market (such as hundi) than banks,” Bakht said.
Remittances are the second largest source of foreign currency (US dollars) after exports. Bangladesh received $12.84 billion in fiscal 2011-12, $14.46 billion in 2012-13 and $14.23 billion in 2013-14.
Despite having a countrywide network of branches, state-owned banks are lagging behind their private peers in remittance transfer, according to BB statistics.
“The quality of services provided by the state-owned banks is far below the standards of the private and foreign ones,” said Bakht who is also a director of state-owned Sonali Bank.
The increase in inward remittances also prompted rating agency Moody’s to raise its growth forecast for Bangladesh to 6 percent from previous 5.8 percent for the current fiscal year.
Remittances augment consumption and investment, and thereby have an important role in stimulating the economy, according to a World Bank study. It also helps the economy maintain a stable balance of payments and current accounts.
Source: The Daily Star