Health’s ADP allocation to be slashed 45% amid implementation woes

With only 2.91% of the ADP allocation for the Health Services Division spent in the first four months of FY25, due to little or no progress in ongoing projects amid the political instability, the interim government plans to slash 45% of the division's development funding in the revised budget.

According to a report from the division, the FY25 budget allocated Tk13,741.33 crore for the division under the ADP. Now, it has proposed reducing this amount to Tk7,600 crore.

Of this, Tk5,913 crore will be allocated from the government fund, while Tk1,687 crore is earmarked as project loans or grants.

The report reveals that several of the projects slated for an allocation cut are named after Sheikh Hasina and her family members, while the project planned for Gopalganj district is among those set for suspension.

Health Services Division officials say the allocation is being reduced after reviewing the progress of ADP implementation. The government determined that the allocated funds for the division could not be fully utilised, leading to the reduction in the revised ADP.

A senior official of the division told TBS on condition of anonymity that due to political instability and the change in government, there was no progress in ongoing projects during the first three months of the fiscal year.

"The revised allocation has been adjusted to match the amount that can realistically be implemented in the remaining months of the fiscal year," he said.

Experts say the World Health Organisation recommends countries with socio-economic structures like Bangladesh's to allocate 5% of their GDP to the health sector. In Bangladesh, however, the allocation is less than 1%.

The decision to reduce the health budget once again highlights the poor state of the country's health sector, they say.

According to the Bangladesh Bureau of Statistics (BBS), individuals seeking treatment at government hospitals are paying nearly 70% of their medical expenses out of pocket. This cost is higher in Bangladesh compared to neighbouring countries.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told TBS that the health sector is consistently neglected in the budget, with allocations falling short of actual needs. Further reductions in the allocated budget will only worsen the challenges and have a negative impact on the sector.

She, however, said, "It will depend on which projects are being cut or where the spending is being reduced. If the cuts are made in areas such as infrastructure development or equipment procurement, it would be appropriate, given the current revenue situation."

"There are ways to improve the quality of healthcare by making better use of the existing infrastructure and equipment," she added.

According to the Implementation Monitoring and Evaluation Division (IMED) of the Planning Ministry, the overall ADP implementation across all ministries stands at 12.29% in the July-October period of the current fiscal year.

Although the Awami League government allocated the budget, it could not be implemented due to protests throughout July, which ultimately led to Hasina government's ouster and the formation of the interim government. The political turmoil prevented institutions from issuing tenders under the current fiscal year's allocation.

Sources said the division has already sent a letter to the Finance Division regarding the proposed budget cut. Despite the budget cut, however, the number of projects is set to increase from 15 to 19 in the revised budget.

According to IMED data, the revised budget for FY24 allocated Tk9,360.68 crore for 40 projects under the Health Services Division. However, only Tk7,175 crore, or 76.65% of the revised allocation, was spent. The original budget had allocated Tk12,209 crore for this sector.

In the proposed budget for FY25, the total allocation for the health sector was Tk41,408 crore including Tk30,125 crore for the Health Services Division and Tk11,283 crore for the Medical Education and Family Welfare Division.

Projects with reduced allocations, suspension

The Health Services Division has been allocated Tk2,588.21 crore from the lump sum ADP allocation, which includes Tk500 crore from the government treasury and Tk2,088.21 crore in project loans or grants. The interim government has decided to reduce this amount.

Of the allocation, it is reported that Tk400 crore will be reduced from project loans or grants, and another Tk200 crore from the government allocation.

The allocation for the establishment of the Essential Drug Company's Manikganj plant has been halved. The project had an allocation of Tk1,656 crore.

The Essential Biotech and Research Center project with an allocation of Tk521.88 crore in Gopalganj has been cancelled.

The interim government has decided to put on hold the EDCL's 3rd Factory Project (second revision) in Gopalganj. Although no allocation was made for this project in the current fiscal year.

Additionally, the expenditure for the Sheikh Lutfor Rahman Dental College, Gopalganj will be reduced. The project had an allocation of Tk41.42 crore.

It has also been decided not to implement the Sheikh Hasina Medical College and Hospital and Jamalpur Nursing College establishment projects for now, savingTk564.74 crore.

The expenditure of Tk501.57 crore for the Sheikh Mujibur Medical College Hospital project in Sunamganj (first revision) has also been suspended.

The allocation of Tk98.43 crore for the Strengthening Regulatory System for Vaccines, Diagnostics, and Therapeutics project has also been removed. This is a new project, approved in January 2024, and was allocated funds for the first time in this year's budget.

It is reported that the allocations for several other ongoing projects have been reduced.

Earlier, the interim government upon assuming power issued a notification changing the names of nine hospitals previously named after Sheikh Hasina and her family members.

Health budget insufficient

According to the World Health Organisation, 15% of the national budget should be allocated to health. Public health experts in Bangladesh argue that, even if not matching the WHO recommendation, at least 10% to 12% of the national budget should be allocated to the health sector.

Public health expert Dr Lelin Chowdhury told TBS that the health sector's budget is insufficient compared to the actual needs, and further cuts would be unfortunate.

"With this level of funding, there is no opportunity to improve healthcare for the country's 17 crore people. At a minimum, Bangladesh should allocate 2.5% of its GDP to the health sector," he said.

But the health ministry's capacity to implement the budget is also important. Merely increasing the allocation is not enough; the ministry's implementation capacity must also be improved, he added.