A bigger ADP, but can Bangladesh make it work?

The proposed national budget for FY2026-27 is more than an outline of the government’s spending plans for the upcoming fiscal year. As the first budget proposed by the administration that took office after one and a half years of interim regime, it signals how the new government intends to navigate the critical demand of economic recovery, fiscal discipline, and long-term development. It comes at a time when the economy continues to grapple with persistent inflationary pressures, fiscal constraints, and growing concerns over the country’s implementation capacity and development effectiveness. As the proposed budget signals a return to ambitious development spending, the real question is whether the institutions that are responsible for selecting, implementing and financing the country’s development agenda are prepared for the challenge.

The Tk 9.38 lakh crore budget is the largest in the country’s history, 19 percent higher than the revised budget of the outgoing year. Within this package, Tk 3 lakh crore has been allocated for the Annual Development Programme (ADP), which is also the largest allocation ever. This is a significant shift from the recent trends of restrained development spending. After remaining around Tk 2.6 lakh crore in FY2023-24 and FY2024-25, the ADP allocation was reduced to Tk 2.38 lakh crore in FY2025-26 to aid fiscal consolidation efforts. The 30 percent increase proposed for ADP allocation signals a return to large-scale public investment after a period of fiscal restraint.

The sectoral composition of ADP reveals both continuity and change in Bangladesh’s development priorities. Transport and communication remains the largest recipient with Tk 50,093 crore, accounting for 16.7 percent of the allocation, reflecting the government’s continued emphasis on infrastructure development. Education and health together is getting Tk 83,121 crore, nearly 28 percent of the total ADP, signalling a notable shift towards human capital development. The Local Government Division has been allocated Tk 33,735 crore, highest among all ministries and divisions, underscoring the importance of local service delivery and rural development.

While these priorities deserve recognition, the effectiveness of the proposed allocations must be assessed against the country’s broader development challenges. Persistent weaknesses in private investment, infrastructure quality, regulatory efficiency, and access to finance, continue to constrain economic growth and employment generation. Whether the proposed ADP can meaningfully address these structural bottlenecks will be a more important test of success.

However, the most debated feature of the proposed ADP may not be its size or sectoral priorities, but its structure. Nearly Tk 97,300 crore, about one-third of the allocation, has been earmarked as block allocation for projects yet to receive final approval. Though some flexibility may be necessary, the scale of block allocation provision is unprecedented and raises critical questions regarding development effectiveness, transparency, and accountability. Effectiveness of public investment significantly depends on transparent project appraisal and prioritisation even before resources are committed. When such a significant share of development spending remains outside the conventional approval framework, the link between planning and allocation becomes vague. This is not just a governance concern. The country’s development experience has long shown that project selection can be influenced by political and administrative considerations, particularly when oversight and transparency are weak. The risk, therefore, is not merely whether resources are spent, but whether project selection is guided by demonstrable development impact or by political, administrative and other non-economic factors.

The question, thus, is whether the proposed ADP targets can be implemented effectively. Recent experiences have shown a noticeable deterioration in ADP implementation, the rate declining from 92.7 percent in FY2021-22, to 85.2 percent in FY2022-23, to around 80.6 percent in FY2023-24 and only 68 percent in FY2024-25, the lowest rate recorded in 49 years. In the first 10 months of FY2025-26, ADP implementation stood at only 41 percent, the lowest in the last five years, reflecting continued weaknesses in the execution of development projects. The obstacles are familiar—procurement delays, land acquisition bottlenecks, cumbersome approval procedures, weak interagency coordination, and capacity constraints—resulting in repeated revisions and time and cost overruns. Without removing these obstacles, the decision to raise ADP allocation by 30 percent raises a legitimate question: what has fundamentally changed within the state’s implementation machinery to justify such a massive expansion? If the existing institutional constraints remain largely unchanged, larger allocations are bound to widen the gap between development ambition and implementation reality.

A further concern relates to financing credibility. The proposed budget sets the revenue collection target at Tk 6.95 lakh crore against the total expenditure of Tk 9.38 lakh crore, resulting in a fiscal deficit of Tk 2.43 lakh crore, one of the largest gaps in the country’s budget history.

Revenue mobilisation remains a persistent weakness, though. The National Board of Revenue (NBR) reportedly fell more than Tk 1.04 lakh crore short of its target by April of FY2025-26, and revenue collection is identified as one of the principal risks to proper budget implementation. If the NBR once again fails to reach its target in the upcoming fiscal year, development expenditure may become the primary adjustment mechanism, as evidenced by the repeated downward revisions of ADP in recent years, where in FY2024-25, the government reduced the ADP by Tk 49,000 crore, and FY2025-26 witnessed a further cut of around Tk 30,000 crore. In this scenario, the plausibility of increasing ADP allocation depends on the government’s ability to mobilise the resources required to finance it.

Returning to a bigger ADP undoubtedly signals renewed development ambition, but ambition alone cannot deliver results. The success of the proposed ADP depends on whether projects are selected transparently, implemented effectively, and financed credibly. Until then, this development ambition will continue to draw scepticism.

Muhammad Muktadirul Islam Khan is principal researcher and head of consultants at the Sustainability Action Learning Lab. He can be reached at muktadir@sustainabilitybd.org.

Views expressed in this article are the author's own. 

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