Budget Allocation to Social Safety Net & Health Sector

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The financial budget for the year 2019-2020 was presented before the parliament on 13th June 2019. It is a very solemn ceremony, where the Minister of Finance defends the fiscal budget by stating the amounts that has been allocated to different sectors and the reasons behind it. Two of the sectors that has received special attention from the government includes the social security and welfare and healthcare sector. This article aims to explain the importance of this sector and how their budget allocation has changed over the years.

Social security/safety provides a foundation of income on which workers can build to plan for their retirement. It also provides valuable social insurance protection to workers who become disabled and to families whose breadwinner dies. According to the World Bank, safety net programs in Bangladesh have been contributing to the reduction of poverty and vulnerability by addressing a range of population groups through different forms of assistance. These include the provision of income security for the elderly, widows and persons-with-disabilities, generating temporary employment for the working age men and women and supporting the healthy development of young mothers and children.
The Government of Bangladesh also allocates significant resources to implement a wide spectrum of social programs. In 2019, a budget of approximately BDT 642 billion, or equivalent to 2.5 percent of the Gross Domestic Product (GDP), has been allocated for this purpose. Among these, about BDT 372 billion is being used to implement safety net programs as per the globally recognized classification. They are in the form of cash allowances, public works, and education and health incentives for poor and vulnerable households, which aim to contribute to the fight against poverty and improving human capital. It covers the activities of five ministries, such as Ministry of Social Welfare, Ministry of Women and Children Affairs, etcetera.
The safety net programs have been divided into 4 categories under which there are several programs. These categories are – Unconditional Cash Transfer, Public Work, Humanitarian Relief and Conditional Cash Transfer. Unconditional cash transfer includes programs such as old age allowance, allowance for widows, destitute and deserted women and allowance for the financially insolvent disabled. Public work consists of two programs- employment generation for the poorest and food for work. While humanitarian relief and conditional cash transfer both includes individual programs- vulnerable group feeding and towards a child feeding scheme.


With promises of doubling the allocation to social safety and welfare sector in the next five years, the government aims to reduce poverty to 12.30 percent and the extreme poverty rate to 4.50 percent of the population by 2023-24. To proposed budget lays out an ambitious plan for the sector, which includes raising state honorariums, increasing the number of beneficiaries under the social security program by raising the number of recipients for adult allowances, for windows and disabled persons who are financially insolvent and/or are students.
As if this alone was not challenging enough, there is a need to ensure the selection of genuine beneficiaries to enhance the effectiveness of social safety net programs. For this purpose, steps have been taken to establish MIS for all programs and database for all beneficiaries. Payments are being made directly from the government to the beneficiaries through the G2P (Government-to-Public) system. Social safety net MIS has been established in the Finance Division for bringing transparency and improving efficiency of social safety net payments. With this MIS, selection process of beneficiaries is easier after verification of information from the National ID server. By using this MIS, payments from the government exchequer to the beneficiary’s bank or mobile bank account are processed through the G2P method.
Investigation into the past allocation of the budget to the social safety and welfare sector reveals that the government has consistently maintained its allocation to the sector. In fact, the sector has consistently retained 5.8% of the total budget. This has been shown below:
As can be seen from the attached graphs, the allocation to the social safety and welfare sector has been steadily maintained at above 5 percentages since the financial year 2016-17.
Despite such gallant effort, there is much room for improvement for the entire sector. A UNDP study conducted a comprehensive study of the social safety nets that are available in Bangladesh. The study was conducted in 2012 and helped identify the coverage of the program, the programs that should be renewed and recommendations going forward. The study discovered that the social safety net coverage was an estimated 25-30% of the poor where the proportional coverage was higher for the poorest groups, indicating a progressive incidence of safety net benefits.
The recommendations of the study seem relevant even to this day. It suggested that Bangladesh has a reasonably good foundation on which social protection can be strategically scaled up to be a key component of poverty reduction and growth. However, issues in scaling up the protection can be attributed to the absence of innovative benefit packages, database on extreme poor, limited focus on nutrition and so on.

A good healthcare system is vital. It means the population has access to combat illness and therefore, there are no financial burdens, because of healthcare, on the country and the individual, due to a reliable workforce. This generates a thriving economy. The OCED Observer, a business magazine, also cements the idea of how the economy depends on a strong healthcare system. Through the data they collected, they state a 10% increase in life expectancy which creates an economic growth of around 0.3%-0.4% a year.
Factors such as GDP, healthcare and life expectancy affect a country’s growth. For example, in the UK, national income is relatively high and it has a direct effect on the health system.
In contrast, Less Economically Developed Countries (LEDCs) such as Sierra Leone feel the effects of an inefficient healthcare system, and this impacts the economy. For example, 4,000 people in Sierra Leone lost their lives to the Ebola virus, and this correlates with the country having a GDP of $4.1 billion USD.
Healthcare spending not only relates to government initiatives but to consumers. A reliable healthcare system means people will put their money into the healthcare system, whether that be personal customer costs like insurance, retail items such as prescriptions or a hospital bill. This is good for the economy.

Healthcare spending has to take into account the benefits of technology, in terms of acquiring advanced equipment and educating health professionals on how to use it. This technology includes instruments for non-invasive surgery, which will result in more effective treatment and less suffering for the patient, and software to predict and therefore prevent outbreaks. Evidence suggests that advances in medical technology contribute to a higher life expectancy. As a result, this means people can contribute more to society, without worrying about their health, which can only be a good thing for a country.
For the financial year 2019, Tk. 29,464 crore (294.64 billion), which is 1.02 percent of GDP and 5.63 percent of total budget has been allocated to the health sector. The health care sector currently includes 12 ministries and divisions which are implementing their programs.
Although both allocations have increased in size, as a proportion of the total budget and of GDP they have either been frozen, or have declined. According to a United Nations Economic and Social Commission for Asia and the Pacific survey published on May 7, 2018 the share of GDP given to health in Bangladesh has fallen from 1.1% in 2010 to 0.8% since 2017, and is now the lowest among 21 countries of south, southwest and southeast Asia.
According to the Healthcare Access and Quality Index published by leading British medical journal The Lancet in May, Bangladesh ranks 133rd out of 195 countries worldwide in providing access to quality healthcare, ahead of regional neighbors India, Pakistan, Nepal, and Afghanistan. However, even though the Seventh Five-Year Plan (7FYP) aimed to spend 1.04% of the GDP on the health sector in the FY19 budget, the sector was allocated only 0.92% of the GDP.
Bangladesh’s share for the health sector is declining at a time when it needs proportionately more funds to attain the UN-mandated Sustainable Development Goals (SDGs) of ensuring healthy lives and promoting individual wellbeing. Furthermore, the country suffers from underspending the budget allocated to healthcare. For instance, in FY2016-17, two-thirds of the allocated Tk20,652 crore went unspent.
The picture painted by the government is rosy, it has launched programs such as the Fourth Health, Population and Nutritional Sector Programme (4th HPNSP) which is being implemented in the health service sector at an estimated cost of Tk. 1,15,486 crore over a period from January 2017 to June 2022. Nested on 29 operational plans, the program is providing health and family planning services and improved medical education throughout the country. It is also worth noting that 84 percent of the HPNSP program is being financed by the government.
The projects undertaken by the government to ensure health service include modernization and expansion of the Dhaka Medical College Hospital, establishment of nephrology units and kidney dialysis centers in government medical college hospitals and all district headquarters hospitals, and establishment of cancer treatment units in all medical college hospitals at the divisional level.
However, according to Bangladesh National Health Accounts 1997-2015, out of pocket (OOP) health expenditure (private spending) in Bangladesh is 67 percent, which is more than double the global average of 32 percent.

A country’s healthcare system can make or break society and this is why it is always an important topic in business as well as in political debates. There are strong opinions on healthcare because the situation is tricky. However, the one thing that can be agreed is that an efficient and reliable healthcare system is an influential factor in establishing a good economy.

A balanced budget is where funds are allocated to sectors depending on their requirement and importance to the growth of the economy. While Bangladesh has achieved great feats, its continued support to nurturing the social safety sector and raised expenditure on the healthcare sector can help ensure the country’s prosperity.


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