For Bangladesh, climate change is no longer merely an environmental concern. It is increasingly a development, economic, and governance challenge. From floods and cyclones to salinity intrusion, river erosion, and heat stress, climate impacts are already widespread and imposing a significant economic and social burden, with an annual loss of around $3 billion, or 1-2 percent of GDP, as estimated by the World Bank’s 2021 Climate Risk Country Profile. Against this backdrop, the proposed FY2026-27 budget offers an important indication of the new government’s approach to one of the country’s most pressing challenges and the broader policy direction that may shape its response in the years ahead.
The significance of the budget becomes clearer when viewed within the broader context of Bangladesh’s evolving climate governance framework. Over the past decades, successive governments have developed a range of policies, strategies, and financing instruments, including the Bangladesh Climate Change Strategy and Action Plan, the Climate Change Trust Fund, the Climate Fiscal Framework, the Delta Plan 2100, and the National Adaptation Plan 2023-2050. These initiatives have gradually integrated climate considerations into public finance and development planning. The challenge today, therefore, is not whether climate change is recognised as a national priority, but whether public investments are adequately aligned with evolving climate risks, and whether institutions have the capacity to deliver sustainable outcomes.
The overall climate allocation for FY2026-27 reflects a growing recognition of the risks, yet it remains modest relative to the scale of our adaptation needs. The proposed amount stands at Tk 51,746 crore, the highest allocation ever, and a continuation of the upward trend observed in recent years. However, the significance of this provision depends not only on its size, but also on how it compares with the country’s growing climate financing needs. The National Adaptation Plan—Bangladesh’s principal adaptation framework—estimates that the country will require around $230 billion by 2050, equivalent to approximately $8.5 billion annually, to address its adaptation challenges. Although the proposed allocation signals continued government commitment to climate action, it also highlights the substantial gap that remains between climate ambitions and the resources required to achieve them.
The sectoral composition of the allocation offers important insight into the government’s priorities. Consistent with Bangladesh’s long-standing climate budgeting approach, climate-related expenditures remain distributed across 25 ministries and divisions rather than concentrated within environmental institutions alone. Agriculture, food, fisheries, and livestock together account for Tk 43,335 crore—an increase of nearly 17 percent over the revised FY2025-26 allocation of Tk 37,126 crore—while the Ministry of Disaster Management and Relief receives Tk 10,350 crore, up from Tk 9,069 crore a year earlier, indicating that the government’s climate response continues to prioritise adaptation, food security, and community resilience, alongside substantial investments in water resources and local infrastructure. This allocation pattern suggests that climate change is still viewed primarily as a development challenge affecting food security, infrastructure, and service delivery, rather than a standalone environmental issue.
The proposed budget also reveals how the government intends to balance immediate adaptation needs with longer-term decarbonisation and energy transition objectives. Of the total climate allocation, Tk 38,906 crore, or 75.2 percent, is directed towards adaptation activities, while only Tk 9,925 crore, or 19.2 percent, supports mitigation efforts. Given Bangladesh’s high vulnerability and its relatively very small contribution to global greenhouse gas emissions, this emphasis on adaptation is realistic. The budget also introduces incentives for solar power, battery industries, and electric vehicles, signalling a growing recognition of the energy transition challenge. However, public investment priorities remain heavily tilted towards conventional energy systems. Despite the above incentives, around 98 percent of power generation-related ADP allocations are directed towards fossil fuel-based projects, compared with only 2 percent for renewable energy. This contrast highlights a broader policy reality: although climate resilience has become firmly embedded within development planning, the transition to a low-carbon economy has yet to emerge as a central driver of public investment.
The greatest challenge facing our climate agenda may no longer be policy design or budget allocation, but the state’s ability to finance and deliver its ambitions. Bangladesh has developed an increasingly sophisticated climate governance framework and continues to expand climate-related expenditure. Yet recent trends in public investment management raise important concerns. The proposed budget projects a fiscal deficit of Tk 2.43 lakh crore, the highest in history in nominal terms, while persistent revenue shortfalls have repeatedly constrained public spending and led to downward revisions of development expenditure in recent years. Although the restoration of Tk 100 crore for the Climate Change Trust Fund has attracted considerable attention and signals renewed political commitment, the amount remains modest relative to Bangladesh’s broader climate financing requirements.
At the same time, ADP implementation has deteriorated significantly, declining from 92.74 percent in FY2021-22 to 85.17 percent in FY2022-23, before falling further to 80.63 percent in FY2023-24, and only 68 percent in FY2024-25, the lowest rate recorded in 49 years. During the first 10 months of FY2025-26, implementation also stood at just 41 percent. Climate projects ultimately depend on the same procurement systems, approval procedures, land acquisition processes, and institutional arrangements that affect the broader development portfolio. Taken together, these trends suggest that our climate challenge is increasingly less about policy commitment and more about financing credibility, institutional capacity, and implementation effectiveness. Without meaningful improvements in these areas, higher allocations may not necessarily translate into stronger resilience outcomes.
Overall, the FY2026-27 budget reflects continued commitment to climate action but also important gaps between ambitions and the institutional and financial capacities required to deliver them. As the first fiscal plan of the new BNP administration, it provides an early indication of a governing philosophy that seeks to embed climate resilience within the nation’s broader development agenda, rather than treating it as a standalone environment-related concern. However, the success of this approach will ultimately depend on whether the ambitions can be matched by adequate financing, stronger institutions, and more effective implementation.
Greater emphasis must be placed on improving project delivery, strengthening domestic resource mobilisation, expanding access to international climate finance, and investing in climate research and innovation. The challenge for the administration is, therefore, not to redesign Bangladesh’s climate architecture, but to ensure that existing commitments translate into measurable resilience outcomes for the communities that are most vulnerable to climate change impacts.
Muhammad Muktadirul Islam Khan is principal researcher and head of consultants at the Sustainability Action Learning Lab. He can be reached at [email protected].
Views expressed in this article are the author's own.
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