Finance Minister Amir Khosru Mahmud Chowdhury on Thursday announced 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 said 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.:

He said 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.”

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.”

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

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

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

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

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

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

The largest share of the allocation will go to allowances, which have been proposed at Tk 44,835 crore, up from Tk 42,642 crore in the revised budget. The increase in this category alone amounts to Tk 2,193 crore.

According to the 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 Tk 5.51 crore for FY27, with around 16.2 percent of the amount set aside for salaries and allowances of government employees.