The national budget for the financial year 2026-27 is set to get bigger by Tk8,000 crore mainly to implement the new pay scale for its employees as well as meeting its electoral pledges and payment of subsidies, officials have said.
Initially, the allocation for the partial implementation of the proposed pay hike had been calculated at Tk 25,000 crore to Tk 27,000 crore, but the amount has gone to Tk 35,000 crore in the past week.
Economists have already warned that the inflation may rise further due to implementation of pay hike from next month. Public employees have not seen pay hike since 2016 despite elevated inflation. In May, BBS recorded general inflation at 9.4 per cent from 9.04 per cent in the previous month.
The previous pay hikes, coupled with low revenue generation, had contributed to a growing public debt and rising interest payments on loans, according to a white paper prepared by a team of economists led by Debapriya Bhattacharya under a policy of the interim government.
A secretary-level committee last month recommended 50 per cent increase in basic salary for the public employees under the new budget in FY27 while the remaining portion in the following year.
The full implementation of the proposed pay hikes will cost the government an additional amount of Tk 1.06 lakh crore in three years when Tk 1.31 lakh crore has been allocated for salary and allowances of about 14 lakh government officers and employees and 9 lakh retirees in the outgoing FY26.
Officials of the finance ministry said the extra Tk 8,000 crore would take the total budget outlay to Tk 9.38 lakh crore to be placed in Jatiya Sangsad by the finance and planning minister Amir Khosru Mahmud Chowdhury on Thursday.
The overall subsidy for power agriculture will stand at Tk 1.16 lakh crore while the amount will be Tk 1.30 lakh crore the for social safety net programme to be featured by family cards and farmer cards in the new budget.
The upward swing of inflation for the successive two months in April and May will rise further in the June following power price hike by around 16 per cent in the past week.
Policy Exchange Bangladesh chairman M Masrur Reaz said salary increase of the government employees should get due consideration although the economy is going through a dull spell.
Amid the price shocks of commodities including energy items because of wars, many countries have reportedly suspended salary hikes and maintained austerity.
The newly elected government has also been implementing austerity steps, but its plans to borrow more in the FY27 may skittle out the much needed curb on non-development budget expenditure, said former World Bank Dhaka office chief economist Zahid Hussain.
The proposed new budget deficit has been fixed at Tk 2.43 lakh crore from initial Tk 2.35 lakh crore, according to the finance ministry officials.
The government has planned to borrow Tk 1.16 lakh crore from foreign sources and the rest Tk 1.27 lakh crore from local sources.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman said the government should improve the service delivery of the public official beside implementation of the new pay structure.
