Remittance in Times of Dollar Crisis: The Lifeline of the Economy

When Bangladesh’s economy faces the formidable challenge of a dollar crisis, remittance from expatriates emerges as a source of relief. Bangladeshis working abroad send a significant portion of their earnings back home, making remittance one of the primary sources of foreign currency for the country. Remittance contributes to GDP growth and helps maintain balance in foreign transactions. Increased dollar inflow stabilizes the local currency and somewhat eases inflationary pressure. In recent years, Bangladesh has encountered a serious dollar shortage, which has put pressure on the overall economy. A dollar crisis intensifies when a country’s import expenditure exceeds its export earnings and foreign income. Bangladesh is heavily dependent on imports for fuel, food grains, edible oil, and industrial raw materials. As a result, when international market prices rise, the demand for dollars increases sharply. In addressing these challenges, remittance plays a crucial role. According to Bangladesh Bank data, foreign exchange reserves first crossed 33 billion dollars in 2017. By 2021, it rose to 48 billion dollars, and in the fiscal year 2023-24, remittance stood at 23.91 billion dollars. However, during the fall of the Awami League government, reserves reportedly dropped to 26 million dollars. In the fiscal year 2024-25, remittance reached 30.33 billion dollars. Additionally, in the fiscal year 2025-26, from July to January, around 19.4 billion dollars were received, compared to 15.96 billion dollars during the same period of the previous year, an increase of 20 percent. From July to March 2026, remittance reached 22.6 billion dollars, which is 22.4 percent higher than before. In the first 29 days of March alone, remittance amounted to nearly 800 million dollars, marking a 10 percent increase compared to the same period of the previous year. As remittance increased, Bangladesh Bank was able to purchase dollars from commercial banks, while the inflow of foreign loans also supported reserve growth. Furthermore, reserves are now being published following the IMF’s Balance of Payments and International Investment Position Manual (Sixth Edition) methodology. Experts believe that remittance acts as a buffer in the dollar market and helps stabilize the exchange rate. It also plays a vital role in maintaining the balance of foreign transactions. When import expenditure is high and a deficit appears in the balance of payments, remittance helps fill that gap, protecting the economy from severe external crises. The impact of remittance on the domestic economy is equally significant. Approximately 60 percent of the money sent by expatriates is used to support families and daily living expenses. Families spend this money on education, healthcare, and basic needs, while also investing in small businesses. As a result, rural economies remain active, employment opportunities are created, and poverty alleviation is supported. Remittance also stimulates investment and economic expansion. Both public and private banks can channel these funds into investment projects such as small enterprises, industries, or educational development. This strengthens the country’s financial structure and ensures that expatriate earnings contribute directly to national development. The economic dynamism created by remittance enhances local business activities and overall economic growth. According to data from the Bangladesh Bureau of Statistics, remittance is a key source of rural income growth. While illegal money transfer methods such as hundi were once prevalent, government incentives, improved banking systems, and strict measures against hundi have encouraged expatriates to send money through legal channels. As a result, the flow of foreign currency has become more transparent and sustainable. The central bank’s ability to purchase dollars from the market has improved due to increased remittance inflow. To encourage legal remittance transfers, the current government offers an incentive of around 2.5 percent, which has further boosted remittance and helped increase reserves. This supports import payments, debt servicing, and overall economic stability. At present, remittance serves as a strong foundation for Bangladesh’s economy. However, overdependence on remittance is not a sustainable long-term solution. To strengthen the economy, export diversification, increased foreign investment, and the development of skilled human resources are essential. During times of dollar crisis, the hard-earned income of expatriates is preventing Bangladesh’s economy from collapsing. Therefore, ensuring the safe and legal flow of remittance and taking effective measures for the welfare of expatriate workers are crucial. If remittance can be properly managed, skilled manpower developed, and these funds invested in productive sectors, Bangladesh will not only become economically stronger but will also pave the way toward joining the ranks of developed nations.