PUBLIC spending plays a crucial role in shaping a country鈥檚 socio-economic development. Over the past decades, Bangladesh has experienced significant progress in economic growth, poverty reduction and human development indicators. However, the effectiveness of these achievements is often hindered by the complexities and inefficiencies in public spending.
Bangladesh has set ambitious development goals: Vision 2041, the Perspective Plan, and the Five-Year Plans. As a result, the number of development projects has grown substantially, putting pressure on public spending. While this growth shows progress, it has also led to overlapping programmes, inadequate prioritisation, and frequent cost overruns. Ministries and agencies often propose projects without proper feasibility studies, which complicates coordination and implementation.
A significant portion of public spending, especially on major infrastructure projects, relies on loans and grants from development partners such as the World Bank, ADB, JICA, and China. This dependence often entails complex conditions, slow disbursements and strict procedures. For example, procurement methods in development partner-funded projects are frequently lengthy, causing delays in completion and increasing project costs.
Bangladesh faces structural weaknesses in budget formulation, execution and monitoring. Public financial management systems are fragmented across ministries, with inadequate integration between planning and financing agencies. Budget allocations often favour political considerations over allocative efficiency, and recurrent expenditures such as subsidies and administrative costs take up a significant portion of resources, leaving limited fiscal space for development-oriented spending.
Public procurement makes up nearly 70 per cent of development spending in Bangladesh. Even with the electronic government procurement (e-GP) system in place, bureaucratic delays, collusive practices and non-compliance with procurement rules are still common. This leads to project implementation taking more time and costing more, which diminishes value-for-money in public spending.
From inflated project costs to manipulation of procurement processes, the leakage of funds remains a persistent issue. Political interference often distorts resource allocation towards politically favoured regions or groups rather than based on need or efficiency. These practices undermine public trust and diminish the developmental impact of public spending.
Many challenges hinder efficient spending. Every fiscal year, Bangladesh allocates a significant amount to its annual development programme. However, the actual implementation rate is often much lower than the allocation, especially in the first two quarters of the fiscal year. Ministries and agencies tend to rush spending at the end of the fiscal year, leading to poor-quality outputs and financial mismanagement.
Cost and time overruns are common in nearly all large projects. For instance, the construction of bridges, power plants and transport corridors often takes years longer than planned, with costs far surpassing the original estimates. This is mainly caused by unrealistic project planning, frequent revisions and land acquisition issues.
Budget documents and expenditure reports are not easily accessible to the public. Even when they are available, the language and structure are not citizen-friendly, which prevents civil society and the media from effectively scrutinising public spending. This lack of transparency allows misuse of funds to go unchecked.
Spending is not always fairly distributed across regions. Major urban centres like Dhaka and Chattogram receive a disproportionate amount of investment, while rural and peripheral areas often lack sufficient funding. This imbalance worsens regional inequality and hampers inclusive growth.
A modernised and integrated public financial management system is essential for tackling the complexities and challenges. Bangladesh should connect planning and budgeting more effectively by adopting medium-term expenditure frameworks across all ministries. Implementing programme-based budgeting can ensure that funds are tied to specific outcomes rather than line-item expenditures.
All public projects should go through thorough feasibility studies, cost-benefit analyses and environmental impact assessments before getting approval. Improving the Planning Commission鈥檚 technical skills is crucial to evaluating and prioritising projects fairly. Additionally, project management units should implement modern monitoring tools, like digital dashboards, to monitor progress in real time and reduce delays.
Although the e-GP system has minimised some irregularities, more reforms are necessary to boost transparency and competition. Third-party monitoring of procurement, stronger audit processes and penalties for collusion can enhance procurement efficiency. Limiting political influence in tendering will lead to better results.
Irregularities and inefficiencies in public spending in social protection programmes should also be addressed adequately. The government can optimise public spending in the sector by focusing on the most vulnerable groups through direct cash transfers, digital payment systems and enhanced beneficiary databases. This approach will free up resources for essential investments in health, education, and infrastructure without compromising social protection.
Using a formula-based approach to resource allocation that considers population size, poverty levels and regional needs can help reduce inequality across different areas. Ensuring balanced spending between rural and urban regions will promote inclusive and sustainable growth. Keeping public institutions free from undue political influence will allow for more rational and effective resource distribution.
While public spending has driven growth, infrastructure development and social progress, inefficiencies and resource misuse have restricted its full potential. To advance, the country must implement institutional reforms, improve accountability, focus on equity and modernise project management. Efficient public spending is not just a technical requirement; it is essential for sustainable economic growth, reducing inequality and building citizens鈥� trust in the government.
听
Dr Nasim Ahmed holds a PhD in Public Policy from Ulster University in the UK and works as associate professor of public policy at the Bangladesh Institute of Governance and Management (affiliated with the University of Dhaka).
