Bangladesh’s migrant workers are sending home record amounts of money. The country's external accounts, however, tell a less reassuring story.
In the first 17 days of October 2026, official remittance receipts reached $1.741bn, taking total inflows since the start of the fiscal year on July 1 to $10.334bn. That represents a 13.3% increase from a year earlier and follows a strong first quarter in which remittances totalled $8.593bn.
The inflows have helped Bangladesh achieve something that appeared difficult only a few years ago: a current account surplus despite a substantial merchandise trade deficit.
Yet the improvement conceals a persistent weakness. While migrant earnings are bringing dollars into the banking system, debt repayments, declining development assistance and adjustments in commercial banks' foreign assets and liabilities are draining foreign exchange from the economy.
Bangladesh Bank's balance-of-payments figures for July and August illustrate the contradiction. Remittances of $5.826bn helped offset a merchandise trade deficit of $3.83bn, contributing to a current account surplus of $599mn.
Over the same period, however, the financial account recorded a deficit of $1.142bn, leaving the overall balance of payments $694mn in the red.
The sharp increase in official remittances does not necessarily mean Bangladeshi workers abroad are earning substantially more. Much of the growth appears to reflect a shift in how money is transferred.
Bangladesh's informal hundi network offered migrant workers exchange rates more attractive than those available through commercial banks for years, . The difference encouraged workers to bypass official channels, leaving a portion of overseas earnings outside the recorded financial system. That incentive has weakened.
Bangladesh Bank's more flexible exchange-rate arrangements, including its managed crawling-peg framework and market-aligned interbank pricing, have narrowed the difference between formal settlement rates and those offered by informal dealers.
The spread is estimated at less than 1.5% to 2%. Combined with the government's 2.5% cash incentive for remittances and additional incentives offered by some commercial banks, reportedly ranging from 1.5% to 2.5%, formal transfers have become increasingly competitive.
The result is an important change in behaviour. Money previously transferred through informal networks is increasingly entering Bangladesh through regulated financial institutions.
Commercial banks have been the principal beneficiaries. Of the $1.741bn received between October 1 and 17, private commercial banks accounted for $1.25bn, or 71.8%. Islami Bank received $281.29mn, followed by Dutch-Bangla Bank with $124.42mn and BRAC Bank with $115.23mn.
State-owned commercial banks handled $330.43mn, equivalent to 19%, while foreign commercial banks accounted for just $3.07mn. The distribution also reflects improvements in payment infrastructure. Connections between Gulf exchange houses, Bangladeshi banks and mobile financial services have made transfers faster and easier, particularly for households outside major cities.
But the shift has an important limitation: it is sensitive to price.
If Bangladesh Bank maintains an official exchange rate that becomes significantly less attractive than the informal market, the incentive to use banks could quickly diminish.
A curb-market premium exceeding 2% to 2.5% would create renewed pressure on formal channels, although the precise point at which workers change their behaviour would depend on transfer costs, convenience and enforcement.
This makes exchange-rate flexibility central to the remittance outlook.
Based on receipts through October 17, full-month inflows could reach $2.7bn to $2.8bn, provided the recent pace is sustained. Indicative projections place November receipts at $2.45bn to $2.55bn and December at $2.6bn to $2.75bn.
These estimates imply a first-half fiscal-year total of roughly $16.3bn to $16.7bn, although the actual outcome will depend on seasonal transfers, exchange-rate incentives and conditions in overseas labour markets.
The immediate achievement is clear: more foreign exchange is entering the formal economy. Whether that translates into lasting external stability is another question.
Bangladesh's current account surplus has attracted considerable attention. The financial account deserves at least as much scrutiny.
The July-August figures show three sources of pressure. The first is a sharp deterioration in net foreign assistance. Net aid flows turned negative by $281mn as disbursements fell to $291mn from $745mn a year earlier, a decline of 60.9%. Repayment obligations, meanwhile, continued.
The second is the adjustment of commercial banks' external positions. Deposit money banks and non-bank depository corporations recorded a negative $878mn contribution to the financial account as institutions settled foreign currency obligations and adjusted their external balance sheets.
The third is external debt amortisation. Medium- and long-term principal repayments totalled $572mn during the two months. These movements help explain why the overall balance remained negative despite strong remittance earnings.
The central bank's official reserves, measured under the IMF's BPM6 methodology, stood at $32.442bn, equivalent to approximately 5.2 months of goods and services imports or 5.8 months of goods imports.
That is a meaningful buffer, comfortably above the conventional three-month import-cover benchmark. But reserve adequacy cannot be assessed through import cover alone. Short-term external liabilities, debt-servicing schedules, exchange-rate pressures and access to new financing also matter.
The immediate concern is not that Bangladesh has exhausted its foreign exchange cushion. It is that the country may struggle to accumulate additional reserves while financial outflows continue to absorb the gains from remittances.
The composition of remittance earnings adds another vulnerability.
The Gulf Cooperation Council economies, led by Saudi Arabia, account for an estimated 55% to 60% of Bangladesh's inward remittances.
Saudi Arabia's ambitious investment programme, encompassing NEOM, the Red Sea development, Qiddiya, Expo 2030 and preparations for the 2034 FIFA World Cup, continues to support demand for construction workers, technicians, logistics staff and maintenance personnel.
Some projects have been rescheduled as Riyadh adjusts spending priorities, but ongoing construction and infrastructure activity still require substantial migrant labour.
Saudi employment policies favouring nationals have affected several white-collar and service-sector occupations. Lower-skilled construction and industrial work remains more dependent on expatriates.
For Bangladesh, however, the underlying problem is not simply the availability of jobs. It is the earnings those jobs generate. Many Bangladeshi workers remain concentrated in relatively low-paid occupations, with estimated monthly remittances of $280 to $420 per worker. Residency-related expenses, recruitment costs and family obligations can further reduce disposable income.
Bangladesh has spent decades expanding the number of workers it sends overseas without achieving a comparable improvement in their occupational profile. The result is a labour-export model heavily dependent on volume rather than productivity.
Certified electricians, plumbers, heating and ventilation technicians, mechanical installers and industrial maintenance specialists can command higher wages than general construction labourers.
Moving more Bangladeshi workers into these occupations would provide a more durable source of remittance growth than relying on exchange-rate incentives to redirect existing transfers.
The distinction is important. Bringing previously informal transfers into banks improves recorded receipts and foreign exchange liquidity. Raising workers' earnings increases the underlying income available for transfer.
Bangladesh needs both.
The negotiations involving Bangladesh's economic delegation, the IMF and the World Bank in Bangkok have implications extending well beyond the immediate financing package.
Dhaka is seeking access to a fresh programme of about $4.5bn alongside wider multilateral support, with discussions reportedly focused on phased financing extending towards 2029. The central issue is the financial account.
Remittances have already helped produce a current account surplus. What Bangladesh needs from external lenders is a dependable flow of financing to offset debt repayments, support reserves and preserve confidence in the foreign exchange market.
A successful agreement could help restore positive net aid flows, improve access to concessional financing and encourage complementary support from the World Bank and Asian Development Bank.
It could also ease pressure on commercial banks managing import letters of credit and other foreign currency obligations. The alternative would be more difficult.
Bangladesh faces continuing external debt repayments at a time when development assistance has slowed. If new financing is delayed, the country may have to rely more heavily on reserves, commercial borrowing or adjustments to domestic demand.
The risk is cumulative.
A prolonged shortfall in concessional disbursements could deepen the financial account deficit. Lower reserves could then increase expectations of currency depreciation, widening the difference between official and informal exchange rates.
That, in turn, could weaken the very remittance flows currently supporting the external accounts.
This is the potential feedback loop policymakers need to avoid: financing pressures weaken confidence in the currency; a wider informal-market premium diverts transfers away from banks; and reduced formal dollar inflows place additional pressure on reserves.
Such an outcome is not inevitable. Nor should projections of a rapid reserve decline be treated as a baseline forecast.
The scale of any deterioration would depend on export receipts, import demand, private capital flows, debt-service schedules, central bank intervention and the timing of new external financing.
Nevertheless, the direction of the risk is evident. The IMF negotiations also present difficult domestic policy choices.
Bangladesh's tax-to-GDP ratio remains close to 7%, among the lowest levels internationally. Raising revenue is essential to reducing fiscal dependence on borrowing, but ambitious collection targets may prove difficult to implement quickly.
Energy subsidy reform presents another challenge. Reducing fiscal losses could strengthen public finances, yet abrupt price adjustments risk adding to inflation and weakening household purchasing power.
Banking-sector reform is equally contentious. High non-performing loans, weak governance and limited accountability have long constrained the financial system.
The IMF is likely to seek credible progress in these areas before committing substantial new financing. For Dhaka, the objective should be to secure a realistic reform timetable without sacrificing access to external liquidity during the adjustment period.
A phased programme, interim agreement or staggered disbursement arrangement could provide breathing space while more difficult structural reforms are implemented.
But such mechanisms are neither automatic nor guaranteed. They depend on negotiations, financing assurances and the willingness of lenders to accept the government's policy commitments.
The cost of failure would extend beyond delayed loan instalments. It could undermine confidence in the broader framework through which Bangladesh is attempting to stabilise its economy.
The government's forthcoming high-level engagement with Japan offers another opportunity to address Bangladesh's external financing needs.
Japan has long been one of Bangladesh's most important bilateral development partners, financing major infrastructure projects including the Matarbari port and power complex, Dhaka's mass rapid transit system and airport expansion.
Such investments have substantial long-term economic value. Their immediate contribution to foreign exchange liquidity, however, is more limited.
Project loans are typically disbursed against specific expenditures, often involving imported machinery, equipment and technical services. They do not necessarily provide the government with freely usable foreign exchange at the moment it is most needed.
Bangladesh's present circumstances make policy-based financing particularly attractive. Unlike traditional project lending, budget-support operations can provide relatively rapid external resources, subject to agreed conditions and disbursement procedures.
Dhaka therefore has a strong case for seeking greater Japanese support through policy-based loans and other financing arrangements linked to its macroeconomic reform programme.
A potential package approaching $1bn would provide meaningful relief, although any such amount would require formal agreement and should not be treated as committed financing.
Japan's development lending is also closely connected to broader international financial arrangements. An agreement with the IMF, or credible progress towards one, could strengthen Bangladesh's position in discussions with Tokyo by providing reassurance over fiscal management, exchange-rate policy and banking-sector reform.
This makes the Bangkok and Japan engagements complementary rather than separate diplomatic exercises. The IMF could help establish the macroeconomic framework. Japan could provide additional financing within that framework, alongside support from other development partners.
Yet external borrowing, however concessional, cannot substitute indefinitely for domestic reform.
Bangladesh needs to strengthen customs valuation and trade-invoicing oversight to reduce opportunities for illicit capital transfers. It must improve banking-sector accountability, manage public borrowing more carefully and ensure that exchange-rate policy reflects market conditions.
It also needs to rethink its overseas employment strategy.
A workforce concentrated in low-wage occupations cannot indefinitely compensate for growing external financing requirements. Investment in internationally recognised vocational certification, stronger recruitment oversight and bilateral skills agreements with Gulf employers could raise the earnings potential of Bangladeshi migrants.
Higher wages would strengthen household incomes and increase the country's underlying capacity to earn foreign exchange.
The present remittance boom has bought Bangladesh valuable time. It has helped stabilise the current account, supported banking-sector dollar liquidity and reduced immediate pressure on the external economy.
But it has not resolved the financial account deficit or the structural weaknesses that created it. The government's first year of economic consolidation will therefore depend on how effectively it uses this period of relative stability.
Securing multilateral financing, maintaining a credible exchange-rate regime and raising the productivity of overseas workers would put the external accounts on a more sustainable footing.
Failure to do so would leave Bangladesh dependent on an uncomfortable arrangement: millions of low-paid migrant workers continually replenishing foreign exchange that the rest of the economy struggles to retain.
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Al Maruf Khan is an economic and trade analyst, a Chartered Accountant in practice, a former President of Chittagong Stock Exchange, former Chairman of South Asian Federation of Exchanges