Can Government Incentive on Remittance Encourages Remitters in Bangladesh? A Policy Study

Abstract

The government's recent two percent remittance incentive has attracted the attention of remitters and policymakers in Bangladesh. The purpose of this inward remittance incentive policy is to encourage remitters to send money in a legal manner. This will minimize illegal money transfers from overseas, and the government will be able to grow the reserve. The goal of this research is to investigate if the policy has had any recent impact on remitters and if there has been any change in money flow from overseas to Bangladesh through legal channels. We investigated using Bangladesh Bank remittance data and discovered a significant increase in the Bangladesh remittance flow in FY 2020-2021. In correlation matrix analysis using Pearson product correlation matrix this study has found Bangladesh's reserve and remittances are more closely linked than those of Bhutan, Pakistan, and Sri Lanka, following Nepal and India. However, the Pearson product correlation value for Pakistan and Sri Lanka was determined to be statistically insignificant.

Remittance Influx through Authorized Channels to Combat the Imminent Food Crisis in Bangladesh

“…However, Ahmed (2010) concluded that remittance inflow has a negative impact on economic growth. Afzal et al (2022) found that the remittance and reserve in Bangladesh are more closely correlated than the other South Asian countries such as Sri Lanka, Pakistan, and Bhutan. Naseem, Aslam, and Hassan (2012) concluded that there is a significant positive relationship between the rise of remittance inflow and the increase of foreign currency reserves in Bangladesh, Pakistan, and India.…”