The recent steady rise in remittance inflow despite crippling affects of the coronavirus in the domestic sector and in the global economy through formal channel proves the success of the government policy to shun remittance through informal process, experts told a webinar.
No significant change is discernible in terms of sourcing of Bangladesh's remittances. The plausible reasons for robust remittance growth in the pandemic period are manifolds.
It includes higher demands for cash by households to overcome adverse effects of the pandemic in terms of erosion of income and job opportunities and erosion of confidence in the informal or hundi operators, Dr Mustafizur Rahman said on Saturday.
CPD's Distinguished Fellow Prof Mustafizur presented the keynote on the occasion while Convenor of Citizen's Platform for SDGs, Bangladesh Dr Debapriya Bhattacharya presided over the event.
Mustafizur mentioned the highlighted the positive impact of the 2 percent exchange rate incentive on formal remittance and said Bangladesh Bank's decision to raise the remittance ceiling to US$ 5,000 without supporting document from initial $ 1,500 in July last year has also played a significant role.
"bKash and some other mobile transfer platforms are paying an additional 1 percent which may have also encouraged larger inflows, and additional disposable for "hajj", which was not spent in 2020, may have been sent back home to boost the flo," he added.
He said the global remittance flow to low- and middle-income countries in pre-covid 2019 was US$ 554 billion. In the backdrop of the pandemic, the World Bank, in April last year predicted sharpest decline in remittance flows.
Its projection for 2020 showed an overall fall in remittance by 19.7 percent to $ 445 billon and particularly a fall of 22.1 percent WB predicted for South Asia, to US$ 109 billion, after a rise of 6 percent in 2019.
But during the July-December of 2020 the growth rate was 38 percent higher than the corresponding period of pre-pandemic 2019, Mustafizur adding it retrenched all forecasts.
He said the government had allocated Tk 3060 crore in FY 2019-20 budget for exchange rate incentives and similar allocations were made under the ongoing fiscal 2021
"Our projections indicate that the government will need an additional amount of about Tk 1,300 crore in FY 2021 for the incentives," he said pointing to the growing inflow of remittance.
