Bangladesh slashes development allocation by 13% with steep cuts in health, education

The ADP has been revised, cutting the allocation for healthcare by 73 percent and secondary and higher education by 55 percent

A shortage of projects has led to a 13 percent cut in the Annual Development Programme (ADP) allocation for the current fiscal year 2025–26.

The allocation has been reduced by Tk 300 billion.

The interim government announced its first budget after the ousting of the Awami League government, introducing cuts to the previous development policies. The ADP budget was set at Tk 2.30 trillion. After the latest revision, the ADP budget now stands at Tk 2 trillion.

The revised ADP was approved at a chief advisor-led meeting of the Executive Committee of the National Economic Council (ECNEC) on Monday.

The largest allocation cuts were in the health and education sectors: the allocation for healthcare services fell by 73 percent, while that for secondary and higher education dropped by 55 percent.

“There has been a shortage of projects,” said Planning Advisor Wahiduddin Mahmud as he briefed the media later.

The interim government struggled to secure viable projects to implement a budget that had already been set lower than in previous years, he said.

The government also discarded some “unacceptable projects”, he said.

In the outgoing fiscal year, the size of the ADP was Tk 2.65 trillion, which was revised down to Tk 2.16 trillion.

Including projects of autonomous institutions and corporations, the total size of this year’s ADP now stands at Tk 2.08 trillion.

The largest share of Tk 1.21 trillion—representing 60.54 percent of this year’s total ADP—has been allocated to five sectors: transport and communication; power and energy; housing and community amenities; education; and local government and rural development.

The planning advisor noted that ADP allocation for the Local Government Division, which is among those receiving the highest allocations, has been slightly increased.

The Roads and Highways Department allocation has been significantly reduced from the original amount, he said, adding that other sectors, such as the Power Division, have seen a minor reduction. The Ministry of Science and Technology has not seen any cut in the budget.

The allocation for the Ministry of Primary and Mass Education, on the other hand, has been reduced from Tk 110 billion to Tk 80 billion. The allocation for the secondary and higher education sector has fallen from Tk 130 billion to Tk 60 billion, the advisor said.

“These are significant changes. The revision has seen the highest cut in the education budget,” he said.

BUDGET FOR METRO RAIL PROJECT REDUCED

The advisor said allocations for the MRT-6 metro rail project, which runs from Motijheel to Kamalapur, have been reduced by Tk 20 billion to Tk 30 billion.

He noted that while foreign funding has been secured for other metro lines, he submitted recommendations for the next government to consider, including how many metro lines Dhaka actually needs, when to start them, and lessons from ongoing projects.

Launching all lines simultaneously without evaluation, he warned, could cause major disruptions across the city, including relocating underground utilities and adjusting above-ground infrastructure.

He wondered why the original allocations for the metro rail projects were so high and how easily the budgets could be reduced through simple evaluations.

POLITICAL UNCERTAINTY SLOWS ECONOMY

The planning advisor has identified “political uncertainty” as the main reason for the country’s investment drought and economic slowdown.

He said that if investment were higher, even a smaller ADP would not have caused problems, and more employment could have been created.

While remittance flows from abroad have increased, benefiting rural areas, poverty largely remains unchanged, he said.

He also described high loan interest rates for small and medium entrepreneurs as the “biggest barrier” to investment.

INTRODUCING INFORMAL ECONOMIC CADRE

Any civil servant could previously be appointed to positions in economic and development planning.

But the ECNEC meeting on Monday made it mandatory to appoint those with relevant diplomas, master’s degrees, or PhDs in economics, statistics, projects, or development in roles in the Ministry of Planning, Ministry of Finance, planning cells, and as project directors.

Finding qualified project directors to ensure proper project implementation has been a major challenge, the adviser said, adding that a ‘PD pool’ has been created, from which personnel will be assigned to new projects.

The advisor described them as an “informal economic cadre.”