NPC assessing govt's ability to hike public servants' pay

The National Pay Commission (NPC) is now assessing the government's fiscal ability before it recommends pay hikes for the government employees, which is scheduled for December 2025.

The move came as the government's fiscal space had shrunk due mainly to its lower revenue collections, according to officials.

The NPC, chaired by former Finance Secretary Zakir Ahmed Khan, recently sought a detail on the government's tax-revenue collection and the collection shortfalls against targets.

The Research and Statistics (R&S) wing of the National Board of Revenue (NBR) is preparing the details for sending those to the NPC.

The report on the government's revenue collection status is scheduled to be sent to the Commission by Monday (Oct 13), officials said.

Based on the report, the NPC would assess the government's financial strength regarding the proposed pay hikes of the government servants.

In a letter the NPC sought revenue collection data from 2020-21 to 2024-25, the revenue collection target for 2025-26, the government's work plans for raising revenue collections and their implementation progress.

The R&S wing has started gathering revenue collecting data from income tax, customs and VAT wings.

A senior official of the Ministry of Finance (MoF) said the government's fiscal space has shrunk following the 'poor tax-revenue mobilisation but the pay-hike for the government employees is one of the priority issues of the interim government.

The official said an inflationary pressure has put the salaried professionals in peril, both for private and government sectors.

On the issue, Dr Fahmida Khatun, Executive Director of the Center for Policy Dialogue (CPD) said it is an international practice to offer extra privileges to the public services, UN officials and some other professionals.

Recently, Finance Adviser Dr Salehuddin Ahmed said the government may not be able to pay salaries if the revenue collections decline.

The country's tax to GDP ratio has dropped by 0.7 percentage points in the last FY.

However, the MoF sources said such fall has not affected the government's fiscal space much as its expenditure budget has been cut short in the current fiscal year.

The interim government lessened its expenditures by 25 per cent or Tk 56.89 billion in the last FY, slashing down the actual size of national budget by 0.9 per cent in FY 2026.

In the budget for current FY, the government has earmarked Tk 846.84 billion as salaries and allowances for government officials.

However, the government is expected to announce a revised budget in December to adjust its higher spending for the new pay scale as per recommendation of the NPC.

The MoF needs to reallocate funds from less important areas to keep the budget deficit within 3.6 per cent.

The new pay scale will be implemented through a gazette notification.

Currently, some 2.4 million government employees get salaries under 2015 pay scale.

Preferring anonymity, an NPC member said the commission members have come into consensus over raising pension and gratuity in the new pay scale that remained stagnant for years.

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