The sharp slowdown in Bangladesh's development spending has become more than a matter of administrative concern; it is now emerging as one of the most significant drags on the country's economic recovery. Public investment has traditionally been the principal driver of infrastructure expansion, employment generation and private-sector confidence. The latest figures on the implementation of the Annual Development Programme (ADP) make for deeply unsettling reading.
The government's development expenditure during the first seven months of the current fiscal year (FY2025-26) has fallen to its lowest level in at least 16 years. According to the Implementation Monitoring and Evaluation Division (IMED), ministries and divisions spent only Tk 50,556 crore between July and January, representing a mere 21.18 per cent of the total ADP allocation of Tk 2,386.95 billion, including allocations for autonomous bodies. Ironically, this performance is even weaker than the corresponding period of FY2025, when administrative activities were disrupted by political unrest and uncertainty. During the same period last year, the implementation rate stood at 21.52 per cent, compared with 27.11 per cent in FY2024 and 28.16 per cent in FY2023.
The numbers point to a worrying deterioration in the government's capacity to execute development projects. IMED data show that while ministries spent 92.74 per cent of the Tk 2.19 trillion ADP allocation in FY2022, the execution rate subsequently declined to 85.17 per cent in FY2023, 80.63 per cent in FY2024, and an alarming 68.18 per cent in FY2025. During the last fiscal year alone, more than Tk 1.0 trillion in development funds remained unspent, reflecting a level of institutional inefficiency that should concern policymakers.
Such persistent underutilisation of development resources carries consequences far beyond accounting statistics. Economists argue that the weakening pace of public investment has become one of the major factors behind Bangladesh's slowing economic growth. The Bangladesh Bureau of Statistics (BBS) reported that GDP growth contracted in two consecutive quarters last fiscal year, falling to 3.03 per cent during October-December and further to 2.22 per cent during January-March. Annual growth also remained subdued, with the economy expanding by only 4.22 per cent in FY2024, slowing further to 3.49 per cent in FY2025 before recovering only modestly to 4.14 per cent in FY2026.
The slowdown has been broad-based. Long regarded as the country's principal growth engine, the industrial sector recorded a negative growth rate of 0.28 per cent-an unusual development in recent years. Agricultural growth moderated to 1.74 per cent, while the services sector expanded by only 3.52 per cent. Such figures underline how weakening public investment has spilled over into the wider economy, dampening business activity, slowing job creation and limiting improvements in public services.
The poor implementation record also exposes a familiar weakness in Bangladesh's development planning. Planning Commission officials acknowledge that ministries and implementing agencies routinely seek larger allocations during budget preparation, yet many fail to utilise the funds they eventually receive. This mismatch between planning and execution has persisted for years, pointing to deficiencies not only in project selection but also in institutional capacity.
Officials of both the Planning Commission and IMED identify several factors behind the slowdown. The government's continued fiscal austerity has undoubtedly constrained expenditure. At the same time, public procurement remains plagued by procedural delays, bureaucratic complexities, and amendments to procurement regulations that have prolonged project initiation. Weak project management, limited technical capacity within implementing agencies and chronic inefficiencies continue to delay execution.
Political developments have added another layer of complexity. The national election held in February and the subsequent political transition created administrative inertia across many ministries. Several project directors reportedly became unavailable or left their posts, forcing authorities to appoint replacements and delaying project implementation. Furthermore, the caretaker government reviewed ongoing development priorities, leading to suspension, downsizing or postponement of numerous projects initiated by the previous administration. While reassessing priorities is understandable during a political transition, prolonged delays inevitably exact economic costs.
The impact is particularly alarming in sectors that directly affect people's well-being. Despite growing demand for better healthcare services, the health sector has recorded exceptionally poor implementation. The Medical Education and Family Welfare Division utilised only 2.98 per cent of its allocation during the first seven months of the fiscal year, while the Health Services Division spent just 6.59 per cent. Such sluggish execution comes at a time when Bangladesh continues to face one of the world's highest levels of out-of-pocket healthcare expenditure, underscoring the disconnect between policy priorities and actual spending.
Even financing patterns reveal the broader slowdown. Utilisation of both domestic and foreign resources has declined. Spending from foreign-assisted projects amounted to only about Tk 186.68 billion, while expenditure from government funds dropped to Tk 280.52 billion from Tk 300.96 billion during the corresponding period of the previous fiscal year. The reduced, austerity-oriented ADP has undoubtedly contributed to this trend, but weak implementation capacity remains the more fundamental challenge.
Not all sectors have performed poorly. Among the 15 ministries receiving the largest allocations, the Ministry of Water Resources recorded the highest implementation rate at 41.10 per cent, followed by the Energy and Mineral Resources Division at 40.66 per cent and the Local Government Division at 36.91 per cent. These examples demonstrate that better execution is possible where institutional capacity and project management are relatively stronger.
