Development spending dips to a very worrying level

Government agencies exposed their weakest capacity in implementing development programme as an unprecedented slowdown in public spending left over Tk 1.0 trillion unspent until penultimate month of last fiscal year, squeezing Bangladesh’s  economic growth, analysts say.

Although the government agencies recovered from bleak Annual Development Programme (ADP)-execution performance four years ago, their capacity kept plunging year on year ever since, they have noted.

Economists say the poor development-work performance in recent years has already hit Bangladesh’s economic growth which declined to only around 4.0 per cent over the years.

The sharp drop in planned spending has not only dragged down overall economic momentum but also negatively impacts business activity, public-service delivery, and job creation, they add.

Planning Commission officials have said when the Annual Development Programme is prepared, almost all the ministries and agencies demand higher funds but after providing allocation, they cannot spend as much when the year ends.

“For example, we had allocated Tk 2.38 trillion in the last fiscal year (2025-26) for all the government ministries and agencies under the ADP, but we were forced to cut the outlay to Tk 2.09 trillion after eight months in February 2026,” says one official.

Yet, he adds, the ministries and agencies had spent less than half (48 per cent) of the Tk 2.09-trillion allocation under the last year’s ADP, keeping Tk 1.08 trillion or 52 per cent unspent in 11 months between July 2025 and May 2026.

Although the Implementation Monitoring and Evaluation Division (IMED) under the Planning Commission has yet to release the official final report for June, the execution trends show an average monthly expenditure of roughly Tk 80 billion.

Although the government ministries and agencies spent 92.74 per cent of the Tk 2.19-trillion ADP allocations in FY2022, the rate started declining to 85.17 per cent in FY2023, 80.63 per cent in FY2024 and 68.18 per cent in FY2025, IMED data showed.

According to the latest statistics from Bangladesh Bureau of Statistics (BBS), the gross domestic product (GDP) growth contracted for two consecutive quarters, dipping to 3.03 per cent in the second quarter (October-December) and further slowing to 2.22 per cent in the third quarter (January-March) at constant prices in the last FY.

Over the last three consecutive years, Bangladesh’s economic growth was recorded at 4.22 per cent in FY2024, which declined further to 3.49 per cent in FY2025 and 4.14 per cent in FY2026, the BBS data showed.

The industrial sector hit a notable slump, recording a negative growth rate of 0.28 per cent that is not noticed in recent years, while agricultural growth eased to 1.74 per cent and the services sector slowed to 3.52 per cent.

Planning Commission and IMED officials have identified several reasons for growth deceleration that include lack of capacity and efficiency of the public agencies, government’s austerity stance, massive inefficiency in public procurement, bureaucratic tangles or and startup delays, and amendment of the procurement law.

The amended Public Procurement Act (PPA) bill, passed parliament on April 9, transitioning procurement entirely to the electronic Government Procurement (e-GP) platform.

Besides, the national elections in February created operational inertia following subsequent political shifts like missing or fleeing of many Project Directors (PDs) which forced the authorities to appoint new leadership and delayed execution, the IMED and PC officials said.

The interim government paused, scrapped, or downsized allocations for numerous projects while adjusting development priorities.

“Persistent skills shortages and institutional inefficiencies” continued to hamper timely project completion, they added.

Policy Exchange Bangladesh Chairman Dr Masrur Reaz says leaving such huge development funds idle, it is not possible to develop a country as well as its economy.

“When a significant amount of ADP development funds remains unspent, it generates a multidimensional shock across the economy,” the economist told The Financial Express.

Unexecuted projects fail to generate essential public services and infrastructure needed to spur private investment as well as employment, he added.

“The government should establish its own functional monitoring and evaluation cell to track project progress in real time,” he has suggested.

Source: https://thefinancialexpress.com.bd/economy/development-spending-dips-to-a-very-worrying-level