Proper budget utilisation is key to reforming the health sector

When it comes to our healthcare sector, the BNP government faces the dual challenge of meeting the high public expectations set by its election manifesto while ensuring that the existing system delivers tangible benefits immediately. Quick, practical improvements in service delivery can build trust and create space for deeper, structural reforms, but long-term change requires careful planning. Striking the right balance between urgent action and sustainable transformation is therefore essential.

One of the most serious structural challenges facing the health sector today is the persistent inability to utilise or spend the allocated budget efficiently. The current resource allocation for the health sector is only one-third of what is ideally required for an effective system. This initial shortfall is further compounded by a fragmented budgetary process; during mid-year reviews, approximately one-third of this already inadequate allocation is typically slashed due to a lack of implementation progress. Of the remaining funds, another third often goes unspent, and of the portion that is finally utilised, nearly one-third is lost to systemic waste. Consequently, only about one-third of the total proposed health sector budget is effectively utilised for public service delivery. At every stage, resources are lost in an invisible web of inefficiencies. To break this cycle and justify a larger budget, the government must demonstrate a vastly improved capacity to spend effectively and create clear, productive areas for expenditure.

The root causes of this poor budget utilisation are well known. The management of the health sector remains highly centralised, and government health services operate under general civil service rules. Recruitment, posting, transfer, procurement, and maintenance are all governed by bureaucratic procedures that are ill-suited to the dynamic and time-sensitive nature of hospital operations. Hospitals require rapid decision-making daily, yet they are constrained by rigid rules that slow down or prevent timely action. As a result, due to the shortage of necessary manpower and equipment, hospitals are often forced to provide services with half or even less preparation.

Hospital services also depend heavily on several other government agencies, including the Essential Drugs Company Limited, the Directorate of Health Engineering, the Public Works Department, the Central Medical Stores Depot (CMSD), the National Electro-Medical Equipment Maintenance Workshop and Training Center, and the Transport and Equipment Maintenance Organisation (TEMO). The inefficiencies, delays, and limitations of these institutions affect the entire health sector. Moreover, the existing Public Procurement Act (PPA) and its rules are not tailored to the specialised requirements of healthcare. Without a clear understanding of this complex ecosystem and targeted reforms, simply increasing the health budget will not resolve the underlying crisis.

To make the healthcare system more effective in the short term, the government must urgently enhance its capacity to utilise allocated funds. As pledged in the election manifesto, the process of raising health sector allocation to five percent of GDP should begin immediately. Five percent of GDP currently equates to approximately Tk 300,000 crore—more than 40 percent of the national budget for 2025-26. Securing this substantial allocation and ensuring its proper utilisation will require immediate institutional preparation.

Although Budget Circular 1 (BC 1) has already been issued and indicates that the health sector allocation for 2026-27 is unlikely to exceed Tk 45,000 crore, it must not be reduced in Budget Circular 2. Instead, it should be increased by around five percent to 6.5 percent. However, such an increase will only be feasible if the Ministry of Health and Family Welfare of Bangladesh creates credible avenues for productive expenditure.

Immediate action is therefore needed to begin the recruitment process to fill the large number of vacant positions across all levels of the health system—including government health centres, hospitals, medical colleges, nursing and midwifery institutions, medical assistant training schools, and institutes of health technology. At the same time, allocations for medical and surgical supplies should be increased, and a provision for lump-sum grants (ranging from Tk 5-50 lakh per hospital, depending on its size and needs) should be introduced to provide greater operational flexibility.

The fragile state of the national economy, compounded by global uncertainties—particularly the ongoing conflict involving Iran, Israel, and the United States—poses serious challenges. Any prolongation or escalation of the conflict could severely damage the economy. With government revenue under pressure and expenditure demands rising, securing additional resources for health will not be easy. In this context, the Ministry of Health must prioritise the maximum and most effective utilisation of whatever is allocated.

While comprehensive administrative reforms and decentralisation are ultimately necessary, several practical short-term measures can deliver quick improvements. One such step is the urgent establishment of a dedicated help desk within the Directorate General of Health Services, staffed with procurement specialists to provide expert advice and technical assistance to hospital procurement committees, thereby speeding up processes and reducing wastage.

Equally important is the need to strengthen the capacity of supporting institutions. To enhance transparency and accelerate their performance, a specialised monitoring cell should be established under an additional secretary of the health ministry.

Furthermore, to translate the commitments of the election manifesto and the recommendations of the Health Reform Commission into reality, a high-level implementation cell should be formed under the Prime Minister’s Office (PMO). This cell, comprising relevant experts, can drive key initiatives including the launch of integrated primary healthcare services, the establishment of a national health commission, and a national health fund. It can also move to relax or exempt the health sector from rigid Public Financial Management rules, initiate the development of an integrated digital platform for unique health IDs, electronic medical records, and Shareable Health Records (SHR), and introduce a ceiling-based Family Health Card to cover outpatient, inpatient, critical illness, and emergency accident-related care.

Major reforms of this scale cannot be effectively led by the health ministry alone. Strong leadership and coordination from the PMO will therefore be indispensable. The time has come for the government to pursue a balanced strategy that gives equal importance to immediate, visible improvements and sustainable, long-term transformation. If it can advance steadily on both fronts, the health sector can achieve an effective and lasting change that truly serves the people of Bangladesh.

Dr Syed Abdul Hamid is professor of health economics at Dhaka University, convener of Wellbeing-First Initiative Bangladesh (WFIB), and chief adviser of Universal Research Care Ltd.

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

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