The government has hiked the cash incentive on remittance sent by expatriate Bangladeshis to 2.5% from the existing 2%.
In a notification, the Finance Ministry said that the new rate was in effect from Saturday.
The move was taken to improve the overall living standards of the people, increase foreign exchange reserves, prevent money laundering, create employment, and ensure remittance sent by expatriates can be used for the development of Bangladesh and encourage sending hard-earned remittance through legal channels, it added.
"This is a New Year’s gift from the prime minister to expatriates,” reads the notification.
It said the government first decided to provide 2% cash incentives for sending remittance in FY20. This resulted in a healthy inward remittance of $18.20 billion, which is 13% higher than the previous fiscal year.
The inward remittance amount was $24.80 billion in FY21, 36% higher than the previous in FY20.
Bangladesh Bank first laid the groundwork for 2% cash incentives on remittance for expatriates in 2019.
Speaking to the media at an event in Dhaka, Finance Minister AHM Mustafa Kamal said he hoped that the $26 billion remittance goal will be met in FY2022-23.
"The government's move to introduce incentives on remittance has worked wonders.”
"We are trying to bring it (remittance inflow) to the legal channel. We will discourage informal (illegal) channels. That is why the incentive has been increased," he added.