Bangladesh has received over $2 billion in remittances for the sixth consecutive month, with a total of $2.18 billion sent by Bangladeshis working abroad in January. This marks a 3.4 percent year-on-year increase, continuing the strong flow of funds that has become a crucial part of the country’s economic stability.
The surge in remittances is largely attributed to disruptions in informal money transfer channels, following the political changes in the country last August. The fall of the Sheikh Hasina-led government amid a student uprising led to a shift in remittance patterns, with more funds flowing through official banking channels. These inflows have helped stabilize Bangladesh’s foreign exchange reserves and supported its external accounts, making remittances one of the pillars of the nation’s economy.
While January’s remittance inflow remained strong, it showed a slower growth rate compared to December, which saw a remarkable 33 percent year-on-year increase. The slowdown in January can be linked to new regulations by Bangladesh Bank, which capped the exchange rate at Tk 122 per dollar for remittance transactions. Previously, banks had been allowed to offer higher rates to attract foreign currency deposits, contributing to the surge in December’s numbers.
According to a treasury head at a private commercial bank, the new uniform exchange rate policy led to a slight deceleration in growth, as banks are now restricted in their ability to offer competitive rates. Despite this, experts like Mati Ul Hasan, managing director of Mercantile Bank PLC, suggest that the January remittance trend aligns with normal seasonal patterns. He expects remittance flows to increase again in the coming months as Bangladeshi expatriates typically send more funds ahead of the holy month of Ramadan and Eid-ul-Fitr.
As of January, Bangladesh has received a total of $15.96 billion in remittances since the start of the 2024–2025 fiscal year, reflecting a 24 percent year-on-year increase. These remittance flows have been crucial in alleviating pressure on the country’s balance of payments and have contributed to an improvement in the liquidity of the forex market.
Despite the strong performance, economists caution that such high growth rates may not be sustainable. Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), pointed out that the strong growth of remittances could be a one-time phenomenon driven by recent political changes. He stressed that long-term stability will require a focus on sending skilled migrant workers and diversifying the remittance markets. Rahman also called for stricter monitoring of the informal market to ensure remittances continue to flow through official channels.
The government has been offering a 2.5 percent incentive to encourage remittance inflows, but Rahman emphasized the need to gradually shift toward a market-based exchange rate to reduce the subsidy burden on the economy.
Ashikur Rahman, a senior economist at the Policy Research Institute (PRI), also highlighted the positive momentum in remittance growth in FY25. He noted that the depreciation of the Bangladeshi taka against the US dollar has made official channels more attractive to workers in international markets. This, in turn, has bolstered the country’s foreign reserves and helped stabilize the balance of payments.
Looking ahead, Rahman predicts that remittances for the fiscal year could reach $30 billion, which would continue to support Bangladesh’s economic stabilization and fuel local demand within the economy.
In conclusion, while the inflow of remittances remains robust, experts urge a focus on sustainable strategies to maintain growth and avoid an over-reliance on subsidies and informal markets. By promoting skill development for migrant workers and ensuring the integrity of official channels, Bangladesh can continue to benefit from this vital economic lifeline.
