• Thursday, Sep 16, 2021
  • Last Update : 10:36 pm

OP-ED: Causes, impacts of high remittance inflow in Bangladesh

  • Published at 09:58 pm August 4th, 2021
File photo Syed Zakir Hossain/Dhaka Tribune

Experts opine that the current trend of remittance inflow in the country is to continue in the future as well

Remittance is the non-commercial transfer of money made by a worker working abroad to his country of origin.

According to the International Monetary Fund (IMF) remittance occurs when a person leaving abroad for at least one year sends back part of his income to the country of his origin and the money is recorded in a different balance of payments.

Remittance is an important source of funding for developing countries. Remittance inflow in Bangladesh has reached a record high.

It is a reflection of the good economic performance of non-resident Bangladeshis.

It also blows a positive wind for the economy of Bangladesh especially in the corona pandemic situation.

Data from Bangladesh Bank shows remittance inflow in the fiscal 2020-21 has hit a record high of $24.77 billion.

In fiscal 2019-20, it was just over $18 billion. It is a 36% rise in a year-to-year comparison.

Experts opine that the current trend of remittance inflow in the country is to continue in the future as well.

The high inflow of remittance in the country did not happen overnight. There are several causes behind it.

Firstly, the government has taken steps like searching for new labour markets abroad, giving training to match the current world demand, ensuring availability of expatriate loans and streamlining the legal channels to allow non-resident Bangladeshis to send money home legally.

These actions have played a large role in the rise in the remittance supply.

According to government’s data, despite the Covid-19 pandemic, over 217,000 workers went abroad in 2020.

New labour market destinations in eastern European countries such as Poland, Albania, and Romania, among others, are in place.

In Asia, Uzbekistan, Kazakhstan, Vietnam and Cambodia are now labour market destinations for Bangladesh.

The government is well aware of the unemployed female workers of the country.

Therefore, due to time befitting training of the female workers, close to 22,000 female workers went abroad in 2020.

Moreover, the Bureau of Manpower, Employment and Training (BMET) have modernized their activities which have allowed services like maintaining a database of the workers, immigration management and employment service management among others.

Supervision of the activities of recruiting agencies has given confidence to prospective employment seekers to go abroad and change their livelihood.

Secondly, the pandemic has changed people’s spending behaviour.

Many are sending money home in fear of a job loss.

Many others are sending money to contain the hardship of the family amid the difficult pandemic situation.

Besides, every year fresh non-resident Bangladeshis add to the job market and contribute to the remittance collection of the country.

The impact of remittance is directly related to the economy. It is considered an important and stable source of income.

The impacts cause chain reactions and these reactions can be both positive and negative.


Stating the positive impacts, first, remittance helps in building a strong and healthy reserve of a country.

This money can be spent for development purposes.

Second, the money entering into the country through legal channels helps banks to increase their funds resulting in higher ability for lending.

Remittances add to the national savings.

Third, if the income generated from remittance is used in a productive manner it can generate economic activity of the country thus contributing to the Gross Domestic Product.

Fourth, remittances can increase domestic consumption and reduce poverty, which is a benefit to the economy.

However, inflow of remittance does have some negative impacts as well.


First, in Bangladesh most of the money is spent for non productive purposes such as consumption.

Second, the money received from abroad is often used to build infrastructure as per the needs of the family.

However, more could have been earned if the money was used in business.

Third, lack of government decisions to proper utilization of remittance may result in low multiplier effect.

Fourth, higher migration means more skilled workers are leaving the country to find better opportunities. It can affect the overall economic condition of the country.

The experts are welcoming the high inflow of remittance especially in this pandemic situation.

The Asian Development Bank in its Asian development outlook supplement of July has stated that the economic recovery of Bangladesh will continue in the near future based on exports and remittances. 

It is now time for the government to take time befitting steps to use this money in a profit generating purpose.

Alertness should also be there so that the trend in the inflow of remittance remains high.


The author is a freelance writer

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