Remittance: What has sparked off this sudden surge?

At a juncture when the country is sunk in a multi-dimensional crisis, a ray of hope suddenly has pierced through the dark clouds of the economy. The flow of remittances sent home by expatriates has taken on an unexpectedly encouraging trend. In June 2025 alone, expatriates sent a record 2.21 billion US dollars to the country. This is not just a number, but a rekindling of hope in an economy weighed down by crisis.

At the same time, foreign currency reserves have risen to 31.72 billion dollars (although, according to the IMF’s BPM6 calculation method, the figure is 24.99 billion). Over the past 11 months, reserves have increased by more than 11 billion dollars. This flow quietly signals that the wheels of the economy are beginning to turn again.

Just a year ago, the situation was entirely different. Reserves had fallen below 20 billion dollars. Severe uncertainty had gripped the market. A dollar shortage, import bottlenecks, weaknesses in the banking sector, and a lack of investor confidence had shaken the very foundations of the economy. Inflation was hovering in double digits. Faced with an import shutdown, many industrial enterprises had suspended production. The government had struggled even to repay foreign loans and import food grains.

Against this backdrop, now that reserves are growing and remittances are setting records, the question arises: is this truly the beginning of a turnaround, or merely a temporary spell of relief?

An analysis of explanations offered by economists reveals several factors behind the rise:

First, the exchange rate of the dollar has been kept stable for a prolonged period, holding between Tk 112 and Tk 113 in the market. With incentives added to legal channel transfers at rates competitive with hundi (informal remittance channels), expatriates now see the banking system as more profitable.

Second, the government’s anti-hundi operations, the law enforcement agencies’ vigilance against money laundering, and the central bank’s strict monitoring have narrowed the scope of illegal channels. As a result, migrant workers have become more inclined to send money through legal means.

Third, global employment opportunities have increased. Bangladeshi workers are being sent to new destinations such as the Middle East, Malaysia, South Korea, and Romania. With the government ensuring skilled worker training, language education, and contract-based deployment, both the quantity and quality of remittances have improved.

Fourth, certain reforms in the domestic banking system — such as improving transaction facilities in expatriate accounts and introducing remittance-based savings schemes — have encouraged people to use legal channels.

Remittance plays a vital role in the country’s economy. When overseas workers send money to their families, this increases the country’s foreign currency reserves. This helps the government in various ways, such as, covering import costs, repaying loans, importing food and fuel, and ensuring dollar availability in the market.

As a result, banks can open more letters of credit (LCs), especially in the industrial and pharmaceutical sectors, which in turn boosts domestic production and services.

A renewed sense of confidence is growing among businesses because the supply of foreign currency has stabilised due to remittances. With the exchange rate holding steady, the prices of imported goods have come under control. Falling food prices are bringing relief to ordinary people’s daily lives. Reduced inflationary pressure is positively affecting economic stability and growth. Thus, remittances are not just about sending money; they are a major driver of the nation’s economic prosperity.

Fiscal Year Total Remittance (Billion USD) June Income (Billion USD) Reserves at end of July (Billion USD)
2021–22                   21.03                 1.86                             39.78
2022–23                   21.61                 1.97                            23.53
2023–24                  30.33                 2.21                            31.72

These figures show an annual growth of about USD 8.7 billion — the highest in the past decade.

Amid so much good news, one question keeps surfacing: Have we truly emerged from the crisis?

The answer is no. This brings us to the most crucial point that despite the rise in remittances, the major obstacles in the banking sector continue to be non-performing loans, defaulted debt and weak governance. Investor confidence has not returned, no new industries are emerging, and private sector growth is stagnant.

By the end of June, non-performing loans had risen to Tk 5,30,428 crore, that is 27.09% of total loans disbursed. In other words, more than a quarter of all loans in the banking sector are already in default.

Experts say the government now needs long-term structural reforms. Without making the banking sector accountable, freeing it from political interference, and ensuring transparency in the tax system, these gains will not be sustainable.

Another major concern is over-dependence on overseas income. If worker deployment slows down or the labour markets in migrant-hosting countries change, remittance flows could drop sharply, potentially triggering a renewed crisis.

1. Improving facilities and services for migrant workers
Ensure round-the clock accessible services for expatriates, simplify banking and remittance procedures at any time, and confirm beneficiaries’ bank accounts to guarantee safe delivery of funds. Regulate recruiting agents to cut excessive costs. Introduce a ‘Remittance Card’ with point systems and pension benefits to encourage the use of legal channels.

2. Strengthening banking and mobile financial service (MFS) channels
Expand bank branches and remittance offices to remote areas. Enhance mobile financial services to enable fast and easy digital transfers. Introduce ‘Wage Earners MFS Accounts’ to strengthen oversight and ensure secure transactions for expatriates.

3. Strict law enforcement and awareness to curb hundi
Enforce tough laws and penalties against money laundering and illegal hundi networks. Identify and punish key hundi operators. Revoke licenses and seize funds where necessary. Provide alternative incentives to encourage expatriates to avoid hundi.

4. Country-specific solutions and stronger embassies
Adopt effective solutions tailored to each country’s specific context, as seen in Saudi Arabia and Italy. Increase embassy efficiency and staffing to deliver faster, smoother services. Reduce the difficulties faced by expatriates and expand consular assistance.
5. Adopting an effective incentive policy and boosting motivation
The current incentive rate is 2.5per cent down from 5 per cent previously. If it had been kept at least at 5 per cent, expatriates would have been even more encouraged to send remittances.
6. Ensuring worker safety and welfare
Guarantee the safety and protection of expatriate workers abroad. Strictly monitor the timely payment of wages. Strengthen safety and security measures for female workers in particular.
7. Simplifying and speeding up the remittance process
Make remittance transfers easier through the expansion of “open banking” and internet banking services. Provide transaction facilities in line with workers’ work schedules. Ensure that workers in remote areas have the opportunity to send remittances quickly via mobile or online channels.
8. Economic and political coordination and goodwill
Take firm steps to increase remittance flows through the sincerity of political leadership and coordinated efforts. Strengthen coordination with banks and financial institutions. Implement the government’s long-term structural reforms.

The current interim government’s strong monitoring of various remittance-related issues has brought positive changes to remittance flows. This improved, targeted management has brought a breeze of calm to the national economy, something we must all acknowledge.

This new flow of remittances has brought relief and hope to the country’s economy. It must be ensured that this is not a short-lived phenomenon but becomes permanent. For that, well-thought-out, sustainable, and realistic economic policies and reforms are essential.

If the government builds on this success with structural changes, maintains transparent governance, and prioritizes production-oriented investment, the dream of a new Bangladesh will be achievable. The hard-earned money of expatriates should not merely be savings, it should be a driving force for the economy. Now is the time to move beyond old mistrust and doubt. Through collective effort, we must build a Bangladesh filled with prosperity and confidence.

* Shoaib Sammo Siddique  is a banker and economic analyst and can be reached at shammo4n@gmail.com