How Bangladesh’s Tk9.38 lakh crore budget for FY27 can accelerate reaching SDGs

When Finance and Planning Minister Amir Khosru Mahmud Chowdhury stood in parliament on 11 June to unveil the FY2026-27 budget, the first budget of the newly elected government, he was doing more than outlining the state's income and expenditure plans for the coming year.

He was also presenting what may be one of Bangladesh's last meaningful opportunities to accelerate progress towards the Sustainable Development Goals (SDGs). With the 2030 deadline now only five budget cycles away, the window for action is rapidly narrowing. Projects and programmes that fail to secure financing in the next few years are unlikely to be completed in time to contribute meaningfully to the country's SDG commitments.

Viewed through that lens, the proposed Tk9.38 lakh crore ($76.6 billion) budget deserves closer attention. Equivalent to 13.7% of GDP and 18.7% larger than the outgoing budget, it marks a notable departure from the incremental spending increases that have characterised fiscal policy over the past decade.

More importantly, the proposed allocation channels resources towards sectors where Bangladesh's progress has lagged most - human capital development and social protection. Whether the ambitions translate into outcomes will depend on implementation, but the budget signals a recognition that the country's development challenge is no longer confined to building roads, bridges and power plants. It increasingly revolves around investing in people and protecting the most vulnerable from economic shocks.

The decade behind the number

The proposed FY2026-27 budget marks a sharp reversal. At Tk9.38 lakh crore, it increases spending by Tk1.48 lakh crore ($12.1 billion) in a single year, signalling a decisive shift from macroeconomic stabilisation towards growth and development spending.

Just as significant is what sits inside the envelope. The development share of expenditure has been proposed to rise from 27.3% in the current revised budget to 33.7%, while the Annual Development Programme is set at Tk 3 lakh crore ($24.5 billion). And for the first time in years, the social infrastructure sector — education, health and safety nets — claims the single largest slice of the budget at 29.7%, ahead of both physical infrastructure (18.7%) and general services (26.1%).

SDG 3 and SDG 4: The long-overdue correction

The headline SDG story of this budget is human capital. Education receives Tk 1,36,606 crore ($11.2 billion) — a deliberate move to 2% of GDP, up from 1.39% in FY2025-26. Health and family welfare nearly doubles to Tk 69,409 crore ($5.7 billion), or 1.02% of GDP, from 0.58% in the outgoing year. 

Bangladesh ranked among the lowest spenders on health and education in South Asia. This year's record allocation on education and health is expected to improve the ranking in the days to come.

Context, however, is sobering. UNESCO's benchmark for education spending is 4 to 6% of GDP; even at 2%, Bangladesh remains at half the floor. Health at 1% of GDP still leaves out-of-pocket spending (over 79% as of 2023) — among the highest in the region — doing most of the work that SDG 3's universal health coverage target assigns to the state. The direction is right; the distance is long.

SDG 1, 2 and 10: Poverty, hunger and the safety net

On SDG 1 and SDG 10, the social safety net allocation rises to over Tk 1.44 lakh crore ($11.8 billion) from Tk1.26 lakh crore ($10.3 billion) in the revised budget. Beyond the size, the design choices matter for SDG targeting: the mother and child assistance programme expands to nearly 19 lakh beneficiaries, one-time support for cancer and chronic-disease patients doubles to Tk1 lakh ($816), and a digital, data-driven beneficiary selection system is promised to fix the chronic mistargeting that has long diluted the poverty impact of these programmes.

Food security (SDG 2) receives Tk 43,335 crore ($3.5 billion) across the agriculture, food, fisheries and livestock ministries, alongside Tk 10,000 crore ($816 million) in refinancing for agriculture and the rural economy. 

Local government and rural development have received Tk 41,352 crore ($3.4 billion), carrying much of the load on safe water and sanitation (SDG 6) — where the budget commits to extending all-weather road access from 93% of the rural population to universal coverage, and to shifting from groundwater towards treated surface water.

SDG 5 and 13: The gaps the bar chart exposes

Lay the allocations against the goals, and two bars stand out for their smallness. The Ministry of Women and Children Affairs receives Tk 5,196 crore ($424 million) — barely half a% of the budget — to carry the formal weight of SDG 5, even as the speech gestures at women-friendly transport, women's entrepreneurship in 200 upazilas and child-marriage prevention. Gender equality is admittedly mainstreamed across many ministries, but the dedicated allocation is a signal, and the signal is faint.

Starker still is the climate. The Climate Change Trust Fund is allocated just Tk 100 crore ($8.2 million) — a rounding error in a Tk 9.38 lakh crore ($76.6 billion) budget — for a country routinely ranked among the most climate-vulnerable on earth. 

Disaster management's Tk10,350 crore ($845 million) and water resources' Tk10,533 crore ($860 million) do real adaptation work, including the Teesta Master Plan, but SDG 13 financing remains scattered, project-driven and dependent on external funds at exactly the moment global climate finance has become less predictable.

SDG 8 and 17: Means of implementation

Every SDG promise in this budget ultimately rests on revenue. Total revenue is targeted at Tk 6,95,000 crore ($56.7 billion) — 10.2% of GDP — leaving a deficit of Tk 2,43,000 crore ($19.8 billion), or 3.6% of GDP. 

A tax-to-GDP ratio stuck near 10% is the single biggest structural constraint on SDG financing, and the budget's answers — mandatory A-Challan, VAT rationalisation, trimming exemptions, a database of state equity to capture dividends — are sensible but familiar. 

Interest payments alone will consume Tk 1,27,500 crore ($10.4 billion), more than health and agriculture combined, a legacy cost the speech attributes to past over-borrowing.

Implementation capacity is the other test. ADP execution slowed visibly in the pre-election period, and an 18.7% expenditure jump assumes a delivery machine that has rarely run at that speed. Add the looming LDC graduation — for which the government has requested a three-year deferral — and the macro targets of 6.5% growth and 7.5% inflation next year, rising to 8.5% growth and 5% inflation by FY2030-31, look less like forecasts than like preconditions.

Five budgets to UN SDG 2030

This budget will not, by itself, deliver the SDGs. But it does something the last several budgets did not: it puts the social sector first in the arithmetic, not just the rhetoric. 

If the 2% education floor and the doubled health allocation are protected through the revision cycle — where social-sector allocations have historically been the first casualties — and if even half the promised revenue reforms materialise, FY2026-27 could mark the moment Bangladesh's budget finally started pulling in the same direction as its 2030 commitments.

Five years is short. But it is not nothing. The next four budgets will decide which.

Mohammad Nurunnabi (left) and Sajjadur Rahman (right). Sketch: TBS

Professor Dr Mohammad Nurunnabi is an Associate Dean for Quality Assurance at Prince Sultan University, Saudi Arabia.

Sajjadur Rahman is the deputy editor, reporting at The Business Standard.  

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.