Expenditure on Health and Education: Trends and Challenges

NGO News Desk :: The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its post- budget issue of monthly Bangladesh Economic Update reveals that declining allocation for health and education is likely to hinder the achievement of the country’s development targets.

The UO in its monthly publication notes that expenditure on health and education in Bangladesh is quite low vis-à-vis other developing countries. Allocation for non-development expenditure on both sectors comprises the large portion of the total allocation resulting in inadequate allocation for development expenditure. In addition, poor implementation status of Annual Development Programme (ADP) in the Ministry of Health and Family Planning and the Ministry of Education poses challenge to the development of these two sectors.

In view of the current challenges in the development of health and education sectors, the think tank finds three major issues that characterize the two sectors. These are – structural inequality emanating from socioeconomic differentials, lack of universal coverage in the provision of social services, and social inequality due to citizens’ lack of access to social services.

The research organisation says that Bangladesh lags behind other developing countries in accumulating public spending adequately to provide its citizens with necessary social services while the allocations for social sectors, particularly education and health, as percentage of total programme expenditure have been on the decline in recent years.

Statistics suggest that for education and technology, the budget allocation has declined by 1.5 percentage point and been proposed as 11.6 percent of the total budget outlay in FY 2015-16 compared to 13.1 percent in FY 2014-15. Allocation for health also declined by 0.1 percentage point from 4.4 percent of the total budget in FY 2014-15 to 4.3 percent in FY 2015-16.

The think tank finds that Bangladesh lags behind other developing countries in regard to health expenditure as percentage of GDP. In 2013, the actual allocation for health in Bangladesh stood at only 3.7 percent, whereas it was 4 percent in India, 6 percent in Vietnam, 6 percent in Nepal, 7.5 percent in Cambodia, and 10.8 percent in Maldives.

Consequently the per capita health expenditure is also quite low in Bangladesh vis-à-vis the other developing economies. For instance, the per capita health expenditure in Bangladesh stood at USD 32 while it was USD 61 in India, USD 111 in Vietnam, USD 39 in Nepal, USD 76 in Cambodia, and USD 720 in Maldives.

The UO further demonstrates that the out-of-pocket health expenditure as percentage of private expenditure on health is much higher in Bangladesh than in other developing countries. In 2013, the out-of-pocket health expenditure as percentage of private expenditure on health was 93 percent in Bangladesh compared to 85.9 percent in India, 85 percent in Vietnam, 81.4 percent in Nepal, 75.1 percent in Cambodia, and 88.3 percent in Maldives.

The research organisation evinces that in 2013, the public spending stood at 32.21 percent of GDP in the developing and emerging economies, whereas Bangladesh accumulated only 16.79 percent of its GDP as public spending. The volume of public spending is far lower in Bangladesh than in its two neighboring countries – India and Myanmar, whose public spending as percentage of GDP reached 27.26 percent and 27.18 percent respectively in 2013.

Statistics suggest that the actual allocations as percentage of the total programme expenditure for education and technology were 17.1 percent, 16.9 percent, 18.6 percent, 18.4 percent, 16.6 percent, and 16.1 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. In FY14, the revised allocation stood at 16.3 percent, whereas in FY15, the budgeted allocation stood at 15.6 percent. Projection says that the allocations may stand at 15.5 and 15.6 percent in FY16 and FY17 respectively.

The think tank demonstrates that the actual allocations for health as percentage of the total programme expenditure were 7.2 percent, 7.1 percent, 7.3 percent, 7.1 percent, 6.6 percent, and 6.4 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. In FY14, the revised allocation stood at 5.7 percent, whereas in FY15, the budgeted allocation stood at 5.3 percent. Projection suggests that the allocations may stand at 5.3 and 5.4 percent in FY16 and FY17 respectively.

Referring to the substantial gap between the allocations of non-development and development budget for health and education, the think tank shows that in FY 2015-16, Tk. 66.81 billion has been allocated as non-development expenditure on health compared to Tk. 53.24 as development expenditure. In the same vein, Tk. 200.44 billion has been allocated as non-development expenditure on education and technology in FY 2015-16, whereas development expenditure has stood at Tk. 121.26 billion.

Noting the poor implementation status of ADP in health and education sectors, the think tank finds that during July’14 – May’15 period of FY 2014-15, the implementation of revised ADP has been only 56 percent in the ministry of health and family planning and 64 percent in the ministry of education.