Bangladesh is facing increasing challenges from climate change impacts, which are influencing the allocation and utilization of public funds for sustainable development. The country is recognized as highly vulnerable to climate change and has consistently ranked among the top in the global Climate Risk Index, placing 7th in 2021 and 13th in the long term up to 2025. These impacts are estimated to result in approximately $3 billion in annual losses for Bangladesh, equivalent to one to two percent of its GDP, posing a significant economic burden on the nation’s growth and progress.
Despite political divisions, successive governments in Bangladesh have shown a commitment to environmental protection and climate action through various policies, strategies, and budgetary measures. However, questions remain about whether the current level of public financing for climate-related initiatives adequately addresses the country’s high vulnerability and critical adaptation needs. Existing resources fall short of actual requirements, relying heavily on domestic funding and facing challenges such as implementation inefficiencies, institutional weaknesses, and insufficient sectoral prioritization.
The newly elected government in office since February 2026 has emphasized environmental protection and climate action in its election manifesto, outlining pledges for renewable energy expansion, tree planting, flood protection, climate-smart agriculture, and sustainable development projects. The upcoming national budget for FY2026-27 will play a crucial role in translating these commitments into actionable steps. Notably, climate financing has been increasing steadily in recent years, with climate-related public expenditure rising from Tk 24,226 crore in FY2020-21 to over Tk 42,206 crore in FY2024-25, reflecting the government’s increased attention to the issue.
However, despite this growth, climate-related spending has remained below one percent of GDP for the past six fiscal years, falling short of the estimated annual budget requirement of around three percent of GDP. The National Adaptation Plan (2023-2050) highlights the substantial gap between current financing levels and the country’s long-term adaptation needs, estimating total requirements at $230 billion by 2050 with an annual need of $8.5 billion. Bangladesh’s climate finance structure heavily relies on domestic resources due to limited international funding inflows, with international finance accounting for less than 20 percent of total climate finance.
Efforts to secure international climate finance, particularly from the Green Climate Fund (GCF), have been insufficient, with Bangladesh receiving only a fraction of the required funds. The upcoming budget for FY2026-27 should prioritize enhancing climate finance strategies, including improving access to international funding mechanisms. Implementation challenges have also hindered the effectiveness of climate financing in Bangladesh, with low Annual Development Programme (ADP) implementation rates indicating the need for better project execution capacity.
Furthermore, the budget should address the declining investment in climate research and knowledge management, critical for long-term adaptation planning and evidence-based policymaking. Strengthening investment in these areas is essential for fortifying Bangladesh’s resilience to climate change. In conclusion, the FY2026-27 budget should focus on practical climate investments aligned with adaptation needs, improving access to international climate finance, enhancing implementation efficiency, and prioritizing research and knowledge systems to bolster long-term resilience in the country.