Bangladesh’s development spending has slowed sharply in the current fiscal year, raising concerns among economists and policy analysts about economic momentum, employment, and service delivery.
According to data released by the Implementation Monitoring and Evaluation Division (IMED), ministries and divisions spent Tk 75,607 crore during the first nine months (July–March) of FY2025–26, representing just 36.19 percent of the Annual Development Programme (ADP). The figure marks one of the lowest implementation rates in recent years and remains well below historical averages.
The slowdown comes amid a period of political transition following the fall of the Awami League government in 2024 and the installation of an interim administration led by Nobel laureate Muhammad Yunus. Analysts say the disruption has created administrative uncertainty, slowing project execution across sectors.
Development spending hits multi-year low
IMED data shows that while implementation rates are broadly similar to last year’s disrupted performance, they fall significantly short of the five-year trend. In FY2021–22, nine-month implementation stood at 45 percent — a benchmark that now appears increasingly out of reach.
Economist Mohammad Lutfor Rahman of Jahangirnagar University said the current pace reflects deeper structural problems. “The current pace of ADP implementation reflects both administrative hesitation and structural weaknesses in fiscal management,” he said in a recent analysis.
He noted that the unusual political situation — with two administrations operating within the same fiscal cycle — has led to caution among project officials. “Since it was not an elected government, there was less accountability. As a result, towards the end, the focus shifted mainly to elections, and development spending did not get due attention,” he added.
Officials in the planning ministry acknowledged that the transition disrupted project continuity. Many project directors reportedly left their positions, while others faced corruption allegations, delaying appointments and approvals. Procurement reforms introduced by the new authorities also slowed tendering processes.
Health sector lags amid rising concerns
The slowdown is particularly severe in social sectors. The Health Services Division recorded an implementation rate of just over 21 percent — one of the lowest among major ministries.
Development researchers warn that this trend could worsen already fragile healthcare access. Md Deen Islam, research director at RAPID, highlighted governance challenges in project execution. “The underperformance in the health sector reflects deeper governance challenges. In many cases, those in charge hesitate to take bold decisions, particularly when procurement-related scrutiny creates a climate of fear,” he said.
Bangladesh already faces high out-of-pocket healthcare costs. Experts warn that delays in health infrastructure and workforce expansion could deepen inequality and push vulnerable households into poverty.
Economic ripple effects expected
Lower development spending is likely to have broader economic consequences. The National Board of Revenue (NBR), which relies on taxes linked to project activity, may see reduced collections as spending slows.
Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh, said the slowdown reflects multiple pressures. “Like last year, there were many disruptions in the current fiscal year, including the national election, political transition, as well as global turmoil,” he said.
He added that total implementation may reach only 60–65 percent by the end of the fiscal year, similar to last year’s historically weak performance.
At the same time, reduced spending could temporarily ease fiscal pressure by limiting government borrowing from banks. However, economists caution that such short-term stability may come at the cost of long-term growth.
Political transition and policy uncertainty
Planning Commission officials say the current government has begun reviewing around 1,300 ongoing projects to align them with its policy priorities. While experts acknowledge that such reviews are standard after a change in government, the scale and timing have raised concerns about further delays.
Dr Mustafa K Mujeri, former director general of the Bangladesh Institute of Development Studies, said project reassessment is justified but time-consuming. He warned that rushing implementation simply to improve statistics could be counterproductive.
The slowdown also reflects broader governance challenges during the transition. Analysts note that administrative reshuffles, restrictions on institutional access, and allegations of politicization have affected decision-making across ministries.
Since August 2024, rights groups have also raised concerns about governance practices under the interim authorities. Organizations such as Ain o Salish Kendra and the Bangladesh Hindu, Buddhist, Christian Unity Council have reported widespread violence and institutional instability during the transition period, adding to the uncertain operating environment for public projects.
Outlook remains uncertain
With only three months left in the fiscal year, most analysts agree that a significant recovery in implementation is unlikely. While spending typically accelerates in the final quarter, the gap appears too large to close fully.
Economists warn that continued underperformance in development spending could slow infrastructure expansion, reduce employment opportunities — particularly for daily wage workers — and weaken overall economic momentum.
At the same time, the situation underscores a deeper policy challenge: balancing political transition with continuity in economic governance.
