AHSAN HABIB

Remittances have become a much-anticipated relief for the economy reeling under macroeconomic stress, growing steadily since August last year and providing the interim government with a breather amid a rapid erosion of foreign exchange reserves.

Last month, remittance inflows to Bangladesh rose by 25 percent year-on-year to $2.52 billion, as migrant Bangladeshi workers sent larger-than-expected amounts to their families back home for Ramadan related purchases and Eid shopping.

“This is the highest-ever remittance inflow in February in Bangladesh’s history,” said Arief Hossain Khan, spokesperson for the central bank.

In the eight months to February this year, inward remittances recorded a 23.8 percent year-on-year growth, according to Bangladesh Bank (BB) data.

Bangladesh received a total of $18.49 billion in remittances in the eight months, up from $14.93 billion in the same period the previous year.

“The surge in remittances is positive news, as it strengthens foreign exchange reserves and helps stabilise the exchange rate,” said Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), a leading civil society think tank in Bangladesh.

He said higher remittance inflows are also a relief for the government, as they ease the country’s debt servicing burden.

When the interim government took office in early August last year, gross foreign exchange reserves were falling rapidly.

According to BB data, the country’s forex reserves reached a record high of $48 billion in August 2021 but declined to $25.92 billion by July 2024.

Over the three years leading up to August 2024, local currency Taka weakened by 42 percent.

Foreign exchange reserves were so depleted that many banks struggled to open letters of credit (LCs). However, the situation has improved somewhat and the erosion of reserves has slowed, due mainly to strong remittance inflows and export growth.

As of 27 February 2025, foreign exchange reserves rose by 1.5 percent year-on-year to $26.13 billion. Under the BPM6 calculation method, reserves increased by 1.8 percent to $20.90 billion, according to BB data.

“Remittance inflows may rise next month as well,” said Rahman, adding that remittances usually “On According to