Climate Budget Allocation Trends and Challenges in Bangladesh
The government has allocated a significant amount of funds for climate-related activities during the current financial year, with Tk 41,208.97 crore set aside for these purposes. This allocation represents 10.07 percent of the total funds designated for 25 ministries and divisions for the ongoing fiscal year.
This figure marks a slight increase compared to previous years, where the allocation stood at 10.9 percent in the 2024-25 fiscal year, 8.99 percent in 2023-24, 8.56 percent in 2022-23, and 8.09 percent in 2021-22. The trend indicates a gradual rise in the proportion of funds dedicated to climate initiatives, reflecting a growing emphasis on addressing environmental challenges.
According to the Climate Financing Budget Report for the 2025-26 fiscal year, the operating budget for the 25 ministries and divisions amounts to Tk 2,21,610.51 crore. Out of this, Tk 14,451.41 crore has been allocated for climate-related activities, which constitutes 6.52 percent of the overall operating budget.
In addition, the development budget for these 25 ministries and divisions is Tk 1,87,689.18 crore. Of this, Tk 26,757.56 crore has been earmarked for climate-related initiatives, representing 14.26 percent of the development budget. This percentage is notably higher than the operating budget's allocation, highlighting the focus on long-term climate resilience and adaptation projects.
The 25 ministries and divisions involved include the Environment, Forest and Climate Change Ministry, Water Resources Ministry, Agriculture Ministry, Fisheries and Livestock Ministry, Disaster Management and Relief Ministry, Rural Development and Cooperatives Division, Housing and Public Works Ministry, Women and Children Affairs, Energy and Mineral Resources Division, Local Government Division, Chattogram Hill Tracts Affairs Ministry, Primary and Mass Education Ministry, Land Ministry, Industries Ministry, Health Services Division, Power Division, Food Ministry, Secondary and Higher Education Division, Social Welfare, Road Transport and Highways Division, Shipping Ministry, Defence Ministry, Textiles and Jute Ministry, Science and Technology Ministry, and Technical and Madrasa Education Division.
Economists have pointed out that while the national budget shows progress in climate financing, it also presents missed opportunities. They note that the development budget consistently allocates a higher percentage to climate initiatives compared to the operating budget. In FY 2025-26, the development budget saw a peak of 14.26 percent allocated for climate-related activities.
Within the operating budget, the allocation for climate initiatives has shown an upward trend over the years. It rose from 6.26 percent in FY 2021-22 to 7.04 percent in FY 2023-24 before experiencing a slight decline. This trend reflects a growing commitment from the government to address climate challenges through targeted budgeting.
In the 2024-25 fiscal year, the operating budget for the 25 ministries and divisions was Tk 2,06,292.67 crore, with Tk 13,980.56 crore allocated for climate-related activities, representing 6.78 percent of the total. The development budget for these entities was Tk 2,11,867.97 crore, with Tk 28,226.33 crore allocated for climate-related initiatives, or 13.32 percent of the total.
The report highlights the importance of tracking how effectively allocated funds are used for climate-related activities. Higher utilization rates indicate strong implementation capacity and alignment between planning and execution. It also emphasizes the need to identify gaps in fund utilization and improve climate finance governance.
An evaluation of climate-relevant budget utilization efficiency reveals that in FY 2019-20, climate-related expenditures accounted for 77 percent of the revised allocation. This increased to 90 percent in FY 2023-24. On average, from FY 2019-20 to FY 2023-24, total expenditures constituted 87 percent of the revised climate allocations.
The report also notes that within the operating budget, the utilization rate reached 95 percent, while development expenditure averaged 82 percent. However, there is a pressing need for ministries and divisions to enhance the execution of development-oriented climate investments.
In recent years, the utilization rate for climate-related expenditures has shown steady improvement. In FY 2019-20, it was 71 percent, rising to 84 percent in FY 2020-21, remaining at 84 percent in FY 2021-22, reaching 85 percent in FY 2022-23, and finally achieving 87 percent in FY 2023-24.
These figures underscore the importance of continued efforts to ensure efficient use of climate finance and strengthen governance mechanisms. As the country faces increasing climate challenges, maintaining and improving these trends will be crucial for sustainable development and resilience.
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