Toward an Unsullied Look at foreign Inward Remittances to Bangladesh: some Empirical Anecdotes

Remittances have been emerged as a key driver of economic growth and poverty reduction in Bangladesh, increasing at an average annual rate of 19 percent in the last 30 years (1979-2008) (Hussain and Nayeem, 2009). Although growth in remittances slowed, inflows from that source still climbed by 22.4% to $9.7 billion in FY2009, in view of the jump in workers who went abroad in 2007 and 2008 (and who are sending money back home). Given the substantial improvement in the trade deficit and the continued increase in remittances, the current account surplus ballooned to $2.5 billion (2.8% of GDP), from $680 million in FY2008 (Bangladesh Bank Annual Report, 2007-08). Foreign remittance earning is an important phenomenon in the economy of Bangladesh. The role of income of expatriate workers in macro-economic stability and future socio-economic development is gradually being recognized by the policy-makers of the country. Foreign remittance, for example, is helping to lessen Bangladesh's trade deficits, resulting surplus in current account balance. Foreign remittance is also contributing to increase country's international credit worthiness and lead to lower borrowing costs. If financial institutions can secure remittance deposits they can increase their access to and participation in international capital markets, thus enhancing the home country's integration in such markets. This paper has explored role of migrants' remittance in the socio-economic development of Bangladesh from both secondary and empirical study perspectives attempting to obtain a comprehensive understanding of remittance channeling and utilization patterns of migrants at the household level. The study has also been aimed to discover some hidden reasons behind informal channel (Hundi) of remittance transfer, and expenditure/investment portfolios of the migrants' household families in Bangladesh. Moreover, the paper also focuses some policy recommendations and operational measures for increasing the inflow of foreign remittances towards Bangladesh and their dynamic utilization so as to enhance their contribution toward the socio-economic development of Bangladesh.