9th Pay Scale announcement not before IMF loan talks in October

Infographics: TBS

The government is likely to announce the ninth national pay scale for government employees after concluding negotiations with the International Monetary Fund on a new loan programme in October although the decision will depend largely on the lender's approval, officials familiar with the matter said.

The IMF has already advised the government to defer implementing the new pay scale by at least two years, citing fiscal pressures and weak revenue mobilisation. Following the recommendation, the government has adopted a more cautious approach to this end.

On 26 July, Prime Minister Tarique Rahman met Finance Ministry officials to review revenue collection, public expenditure, the fiscal impact of the proposed pay scale and the overall macroeconomic outlook.

During the meeting, Finance Minister Amir Khosru Mahmud Chowdhury outlined the additional expenditure required to implement the salary structure. The premier instructed officials to conduct a more detailed review, particularly considering the risk of higher global energy prices, pressure on domestic gas supplies and broader economic uncertainty.

Officials said the government's final negotiations with the IMF are expected to take place on the sidelines of the World Bank-IMF Annual Meetings in Bangkok from 12 to 18 October.

According to officials, the IMF's position on increasing permanent non-development expenditure, particularly public sector salaries, will be a key factor in determining whether the pay scale moves forward.

A senior Finance Ministry official said an IMF delegation visiting Bangladesh from 12 to 16 July discussed salary and allowance budgeting with the Finance Division. IMF representatives reportedly said Bangladesh's current revenue base is not strong enough to support a significant increase in government salaries.

The lender also noted that government spending on social safety net programmes, including Family Cards, Farmer Cards and subsidies, is rising rapidly while revenue growth has lagged behind. Given persistent inflation and limited fiscal space, the IMF believes introducing the new pay scale now could create additional financial risks.

Officials, however, said the government has not abandoned the proposal.

A 10-member high-level committee led by Cabinet Secretary Nasimul Ghani has already prepared a revised framework for the pay scale after reviewing recommendations from the National Pay Commission 2025, the Bangladesh Judicial Service Pay Commission 2025 and the Armed Forces Pay Committee 2025.

The proposal, with some revisions, has been submitted to the Finance Ministry and presented to the prime minister.

A senior official, requesting anonymity, said the government is now considering phased implementation or alternative approaches to reduce the fiscal burden. The strategy is expected to be finalised before the October IMF meeting.

The process to revise the salaries began under the interim government, which formed the National Pay Commission 2025, led by former Finance Secretary Zakir Ahmed Khan. The commission submitted its report on 22 January this year, recommending salary and allowance increases of 100% to 140%. 

It proposed raising the minimum basic salary from Tk8,250 to Tk20,000 and the maximum from Tk78,000 to Tk160,000, alongside increasing the Baishakhi allowance from 20% to 50%, revising transport allowances for grades 10 to 20 and restructuring other benefits.

The commission estimated the recommendations would require an additional Tk106,000 crore annually.

In the FY27 budget speech, the finance minister announced plans to implement the new pay structure in phases from July and allocated Tk54,572 crore more for the public administration sector than in the revised budget.

According to officials, around Tk44,000 crore of the additional allocation has been earmarked for the potential implementation of the new pay scale for government employees, MPO-listed teachers and pensioners.

Economists say a new pay scale is overdue, noting that government employees have not received a salary revision since 2015 while high inflation has significantly eroded their purchasing power.

However, they also warn that Bangladesh's tax-to-GDP ratio remains low and revenue mobilisation has yet to improve sufficiently.

Researchers at the Centre for Policy Dialogue have cautioned that implementing the new pay scale without strengthening revenue collection could force the government to rely more heavily on domestic and foreign borrowing, widening the budget deficit and adding pressure on the economy.