The country’s foreign exchange reserve crossed US$18bn yesterday thanks to increased inflow of foreign loans in the private sector and remittance inflow which is little slow due to political unrest.
It took only two-month period to cross the mark from the previous record of $17bn in October, according to Bangladesh Bank statistics.
The deposit would enable Bangladesh to meet import expenditures for around six months, said a senior executive of Bangladesh Bank.
However, the remittance inflow remained slow during the political unrest. But lower import payment pushed the reserve higher, he said. Besides, the central bank took steps to stimulate exporters to increase exports.
Bangladesh is the 7th largest remittance receiving country in the world, which has been growing at double digits since 1980s, and now it accounts for about 11% of GDP, according to the central bank.
“Bangladesh Bank can use the reserve as a bailout package for affected businessmen during political unrest as there is no need to hold this high reserve,” said Prime Bank Managing Director Ehsan Khasru.
The country saw 14% fall in remittance inflow in November as compared to the previous month. In November, the wage earners sent home a total of $1.05bn. In October, the figure was $1.23bn.
Central bank officials said the drop in remittance was due to aggravating political unrest, which is currently sweeping through the country.
Around 30% to 40% of remittance is coming through informal channels, according to a recent study by Bangladesh Human Resource Development Centre (HRDC).
According to the Bureau of Manpower, Employment and Training (BMET), Bangladeshi expatriates remitted $14.16bn in 2012 and $8.28bn up until July 2013. Researchers at the HRDC claimed that more than 30-40% of the remittances were sent through informal channels.
According to the 2006 World Bank Global Economic Prospect Report, a total of 54% of remittances in Bangladesh were coming through informal channels.
According to Bangladesh Bank data, in 2008-09, the remittance inflow was $9.7bn against the 650,059 migrant labour and it rose to $14.5bn in 2012-13 despite the number of migrant workers dropped to 441,301. Global Diaspora remittance flows projected to reach $550bn in 2013.