In its first budget after 20 years out of power, the BNP government is poised to introduce measures to curb waste and expand medical coverage, driven by a sharp rise in development expenditure.
Of the Tk41,908 crore current health budget, the Annual Development Programme (ADP) accounted for Tk18,148 crore. For the upcoming fiscal year, the finance minister is set to propose to boost the ADP allocation alone to Tk35,027 crore, bringing the total health allocation to Tk69,409 crore.
The proposed allocation represents 11.08% of the total ADP and 1.01% of GDP, a significant increase from the current year’s 0.59% of GDP.
Beyond the Ministry of Health, the allocation covers health services managed by other authorities, including the Ministry of Social Welfare, the Islamic Foundation, the Police Directorate, and the Local Government Division. Looking ahead, the budget pledges to gradually increase the combined allocation for education and health to 5% of GDP.
Health will rank third in sectoral funding, behind only the transport and communication, and education sectors.
While critics condemn the country’s historic health funding of under 1% of GDP, experts argue the deeper crisis is spending capacity rather than the allocation itself.
The health sector regularly fails to exhaust its development budget, and corruption allegations remain rife.
In the first 10 months of the current fiscal year, the Ministry of Health’s two main division spent just Tk933 crore, less than 10% of their total budget.
Ahead of the February 12 general election, BNP pledged to model Bangladesh’s union-level healthcare on the UK’s NHS, issue universal health cards, recruit 1,00,000 healthcare workers, and raise health funding by 5% annually.
Though the government has announced the 1,00,000-worker recruitment and plans to double the capacity of 50-bed upazila hospitals, critics highlight a lack of tangible reform during its first three months in office.
Nevertheless, Finance Minister Amir Khosru Mahmud Chowdhury recently announced that universal healthcare initiatives will be launched in the next budget, confirming that health card distribution is already underway.
Tax exemption proposal coming
The new BNP government is launching initiatives to develop the domestic medical industry and strengthen public health protections by introducing targeted tax and duty exemptions. In the upcoming budget, the finance minister is set to propose relief across the pharmaceutical sector, public health services, and assistive devices for people with special needs to curb overall healthcare expenditure.
To support local medical equipment manufacturing, the government plans to set a 15% import duty on certain essential raw materials and a reduced 5% duty on others, whilst extending these concessional benefits until 30 June 2030.
To ease the financial burden on kidney patients, the government will propose completely abolishing the existing 15% VAT and 5% advance income tax on imported dialysis filters, a measure estimated to cut the cost of each session by approximately Tk 800.
Additionally, the import duty on mortuary refrigerators used for preserving bodies will be slashed from 25% to just 1%.
Major incentives are also being introduced to boost domestic pharmaceutical capacity and protect Bangladesh’s international export market.
The government is likely to propose zero% import duty and VAT exemptions on nine new raw materials used in manufacturing cancer drugs, alongside the complete withdrawal of import duties on 51 new raw materials to encourage local production of Active Pharmaceutical Ingredients (APIs).
Furthermore, 17 more basic raw materials will be brought under existing concessional facilities, reducing their import duty to zero%.
In the public health sector, the government aims to modernise waste management in industrial areas across Dhaka and other divisional cities by reducing the import duty on sewage treatment plants from 5% to 1%.
Conversely, to discourage the consumption of products harmful to public health, a hefty 350% supplementary duty will be slapped on nicotine granules and nicotine pouches under a newly created HS code.
Finally, to improve mobility and quality of life for people with special needs, a proposal will be made to completely exempt 21 types of assistive devices from import, regulatory, and supplementary duties, as well as advance tax.
According to the government, this initiative will foster greater independence for individuals while significantly alleviating financial pressure on their families and society.
The health sector will receive a significant funding boost in the proposed budget for the 2026-27 fiscal year (FY27), with sharp increases across both major divisions.
The Health Services Division has been allocated Tk49,386 crore, a massive jump compared to the Tk21,933 crore in the previous year’s revised budget and Tk14,763 crore in the original budget.
Signalling a strong focus on infrastructure and service expansion, a major share of this funding, Tk26,805 crore, has been earmarked for development spending.
Similarly, the Health Education and Family Welfare Division received Tk13,466 crore, more than doubling its previous allocations of Tk6,121 crore in the revised budget and Tk4,268 crore in the original budget. Its development allocation stands at Tk8,221 crore, underscores a heightened priority for structural growth.
This brings the combined ADP allocation for both health divisions to Tk35,027 crore for FY27.
This aggressive development push stands in stark contrast to historical spending. For context, the Health Services Division’s FY27 ADP allocation of Tk26,806 crore follows an actual expenditure of just Tk2,001 crore in FY24.
While that budget was initially raised to Tk11,617 crore in the original FY25 budget, it was later drastically slashed to Tk3,118 crore in the revised version.
A similar trajectory applies to the Health Education and Family Welfare Division. Its FY27 ADP allocation of Tk8,221 crore follows an actual spending of a meager Tk412 crore in FY24. In FY25, its original ADP allocation of Tk 5,932 crore was ultimately scaled back to Tk 1,346 crore in the revised budget.
Insufficient allocation remains unspent
Healthcare professionals have argued that funding for the Health Services Division and the Health Education and Family Welfare Division has been consistently inadequate over the past five years.
Despite this shortfall, a significant portion of the allocated budget remains unspent.
In the 2024-25 fiscal year, the Health Services Division managed to utilise only 21.74% of its budget, while the Health Education and Family Welfare Division spent a mere 15.36%.
Dhaka University Health Economics Professor Syed Abdul Hamid welcomed the historic budget boost proposal, but warned that execution is everything.
“The proposed budget will remain mere words unless the government overcomes deeply rooted structural bottlenecks to fully utilise the funds,” Hamid told TIMES.
To maximise the budget’s impact for citizens, Hamid called for urgent reforms. These include fixing procurement failures, improving hospital management, and strengthening key state agencies like EDCL, CMSD, PWD, and HED.
He also emphasised the need to hire more nurses and technologists, expand maternal care, fund treatments for critical illnesses, and link E-Health Cards to tangible financial benefits.
