Remittances reach $2.97bn in first 11 months of current fiscal year

Expatriate Bangladeshis sent $2.97 billion in remittances through banking channels in May, marking the second-highest monthly total in the country’s history, according to the central bank.

Bangladesh Bank spokesperson Arif Hossain Khan told reporters on Monday that remittances rose by nearly 32 percent in the first 11 months of the current fiscal year compared with the same period last year.

March saw the highest monthly inflow so far, with $3.29 billion, followed by slightly lower figures in April and May. In contrast, the previous record stood at $2.64 billion in December 2024.

Between July and May of the current fiscal year, remittances totalled $27.5 billion, up from $21.37 billion during the same period in the previous year, representing a 28.7 percent increase.

A treasury head at a private bank attributed the surge to greater exchange rate stability and a decline in informal money transfers such as Hundi, reducing the gap between open market and official bank rates.

Earlier this year, Bangladesh Bank adopted a market-based exchange rate for the US dollar.

On May 14, the governor noted that the rate had remained largely stable and indicated that central bank intervention in the forex market would likely be minimal going forward.

The move was part of broader reforms tied to securing the fourth and fifth tranches of a loan from the International Monetary Fund (IMF), expected within this month. The IMF recently signalled its approval after negotiations over conditions, including exchange rate liberalisation.

However, a potential threat to remittance growth looms.

In May, concerns rose over a proposed 5 percent tax on remittances from the United States under a new bill backed by President Donald Trump. The bill, titled the “One Big Beautiful Bill Act,” has passed the US House Budget Committee and may go to a vote in Congress next week.

If enacted, the tax would apply to non-citizens, including H-1B and F-1 visa holders, green card holders, and business travellers. There is no exemption threshold, any amount sent abroad would be taxed.

The measure would not apply to US citizens.

The development is particularly worrying for Bangladesh, as the US was the top source of remittances in the first nine months of FY 2024-25, sending $3.94 billion, followed by the UAE with $3.12 billion.

Economists warn if the tax becomes law, it could negatively impact Bangladesh’s remittance inflows in the coming months.