Finance Minister Amir Khosru Mahmud Chowdhury announced on Thursday that a new pay scale for government employees will be implemented in phases starting from July 1, citing the rising cost of living and inflationary pressures.

He made the announcement while presenting the proposed national budget for the 2026-27 fiscal year in Parliament.

The minister noted that government employees have been receiving salaries and allowances under the same pay structure for nearly eleven years.

“During this period, the cost of living has increased significantly due to inflationary pressures. In recognition of this reality, the government is announcing the phased implementation of a new pay structure for public employees beginning on 1 July 2026," Khosru said.

He emphasized that merit, integrity, competence, experience, and professional qualifications will serve as the principal criteria for all appointments, transfers, and promotions across the public service in the government’s pursuit of building a “Meritocratic Bangladesh.”

Amir Khosru expressed firm belief that the ongoing reforms will extend far beyond the simplification of administrative procedures.

“They will contribute to improving the overall business environment, attracting greater domestic and foreign investment, creating new momentum for enterprises of all sizes, strengthening the foundations of production and exports, and expanding employment opportunities across the economy,” he added.

An amount of BDT 89,380 crore has been earmarked for salaries and allowances of government officials and employees in the next fiscal year.

This allocation is BDT 4,641 crore, or 5.47 percent, higher than the revised allocation of BDT 84,739 crore in the outgoing fiscal year.

According to budget documents, the original allocation for government salaries and allowances in FY26 was BDT 84,114 crore, which was later revised upward to BDT 84,739 crore.

The proposed allocation also marks a significant increase from the actual expenditure of BDT 69,423 crore recorded in FY25, indicating a rise of nearly BDT 20,000 crore in annual spending on government pay and benefits over two years.

Of the total allocation, BDT 13,874 crore has been earmarked for officers’ salaries, up from BDT 12,927 crore in the revised budget for FY26, reflecting an increase of BDT 947 crore.

For salaries of employees, BDT 30,671 crore has been allocated, compared to BDT 29,170 crore in the revised budget, registering an increase of BDT 1,501 crore.

The largest share of the allocation will go to allowances, which have been proposed at BDT 44,835 crore, up from BDT 42,642 crore in the revised budget.

The increase in this category alone amounts to BDT 2,193 crore.

According to experts, annual increases in salary and allowance allocations have become necessary due to rising living costs, inflation and the continued recruitment of personnel in public service.

An analysis of the proposed budget shows that the government's total recurrent expenditure has been estimated at BDT 5.51 lakh crore for FY27, with around 16.2 percent of the amount set aside for salaries and allowances of government employees.

With Inputs from UNB