Bangladesh

Bangladesh's Development Spending Hits 17-Year Low in First Quarter

26 October 2026 21:10 PM

NEWS DESK

The government’s development spending in the first quarter of fiscal year 2026-27 (FY27) fell to its lowest level in at least 17 years, raising concerns about its ability to implement budget plans and support economic growth.

Ministries and divisions spent Tk 12,017 crore, or just 3.89 percent of the Annual Development Programme (ADP) allocation, between July and September, according to data from the Implementation Monitoring and Evaluation Division (IMED) released yesterday.

The implementation rate was 5.09 percent in the same period of FY26, 4.75 percent in FY25 and 7.5 percent in FY24.

ADP implementation this year was also slower than in either of the previous two fiscal years, when widespread administrative disruption following the 2024 mass uprising hampered development spending.

Spending was particularly low in the health sector, despite growing concerns about access to healthcare. The Medical Education and Family Welfare Division spent just 1.86 percent of its allocation, while the Health Services Division used only 1.78 percent, IMED data showed.

Md Deen Islam, a professor of economics at the University of Dhaka, said the slow pace of ADP implementation was worrying because public investment plays a key role in driving domestic demand.

“If public spending falls short of planned levels, domestic demand will weaken, and economic growth will slow,” he said.

Industries such as construction, cement and logistics depend directly on public investment and could suffer if government spending remains low, he added.

Weak implementation could also discourage private investment by undermining confidence in the government’s ability to carry out its plans.

“If the private sector sees that the government cannot implement its plans, it sends the wrong signal. Investors may become more cautious and uncertain about whether to invest under these circumstances,” Deen said.

Delays in major development projects could also increase costs and reduce their economic benefits, he said.

“Many projects may initially have a positive net benefit, meaning their benefits exceed their costs. But delays and rising costs can reduce those benefits,” he said.

Delays in power and transport projects could also raise business costs and reduce private-sector productivity.

“If these projects are delayed or not completed properly and on time, the cost of doing business will rise, and productivity will fall. This could affect private-sector jobs and create further challenges,” he said.

Deen warned that the new government needed to reverse the downward trend early in its tenure to avoid these risks.

“If the new government fails to reverse this downward trend early in its tenure, I am concerned that these risks could materialise,” he added.

Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), shared these concerns, saying the slow pace of ADP implementation reflected persistent weaknesses in government agencies’ ability to carry out projects.

“The expected improvement in implementation capacity has not materialised, suggesting that government agencies continue to struggle to deliver on their budget commitments,” he said.

He said the fact that the implementation rate had fallen below the level recorded under the interim government was particularly concerning, as agencies continued to miss their development targets.

“Budget allocations can deliver their intended economic benefits only when the money is spent on time, and projects are completed effectively,” he said.

Ashikur said improving ADP implementation should be a priority as the economy needs fresh momentum.

“We cannot allow government agencies to remain stuck in an inefficient working mode when the economy urgently needs renewed momentum. Addressing this weakness must be a priority,” he added.

economic growth