Pay Scale Funds Diverted to Subsidies and Loan Waivers

Uncertainty has arisen over the implementation of the long-awaited new National Pay Commission for government employees. The government has redirected almost the entire Tk 40,000 crore earmarked in the budget for the commission’s rollout to other sectors—primarily fuel subsidies and fulfilling election manifesto promises. As a result, the chances of introducing the new pay structure in the current fiscal year appear slim.

A report published in Jatiya Orthoniti on Saturday (14 March), quoting sources in the Finance Division, revealed these details.

According to the sources, out of the Tk 40,000 crore allocated in the 2025-26 budget for salary and allowances, Tk 39,038.07 crore has already been reallocated to various heads.

Officials explained that the interim government had set aside the amount as preparatory funding for the new pay commission. However, the rapid change in the international situation due to the Iran war and instability in global fuel markets shifted the government’s spending priorities.

Centre for Policy Dialogue (CPD) Honorary Fellow Mostafizur Rahman told Jatiya Orthoniti: “Such an outcome was expected. It was not right for the government to make such a large decision just days before handing over power.” He declined to comment further due to lack of detailed information.

The ongoing war in Iran, triggered by U.S. and Israeli attacks, has severely disrupted global fuel supply. Iran’s actions have kept the Strait of Hormuz largely closed—one of the world’s key energy corridors—leading to a sharp rise in global oil and gas prices. The government now faces enormous additional costs for fuel imports. This has forced extra allocations for oil, liquefied natural gas (LNG), and liquefied petroleum gas (LPG) subsidies.

Additionally, to fulfil election commitments, the government has allocated funds for waiving up to Tk 10,000 in agricultural loans (principal and interest) and launched the Family Card scheme providing Tk 2,500 monthly cash assistance to women in poor households.

The Finance Division stated that Tk 24,000 crore from the reserved salary fund has been used as additional fuel subsidy in the current fiscal year. Another Tk 15,000 crore has been allocated for agricultural loan waivers to sustain production and ensure food security.

For the Family Card pilot project, Tk 38.07 crore has been earmarked.

With these reallocations, almost the entire Tk 40,000 crore reserved for the pay commission has been exhausted. Only Tk 961.93 crore remains.

Finance Division officials said that under the current budget framework, implementing the new pay commission—which requires a massive additional outlay—is no longer realistic.

A Finance Division official stated: “The preparation for salary increases for government employees cannot be implemented in the present situation. The fuel crisis in the international market and rising import costs have significantly impacted the government’s financial planning. For now, the possibility of implementing the pay commission is virtually non-existent.” He added that it is unlikely the situation will change within the current fiscal year, as a large portion of the budget has already been committed to urgent sectors.

Meanwhile, a section of government employees has expressed disappointment over the diversion of funds meant for salary increases. Several officials said they understand the economic pressure on the country but hope the government can at least take partial steps.

One official remarked: “We have learned from various sources that the pay commission will not be implemented. Still, if the government wants, it can implement at least some portion. Especially in this period of high inflation, even a modest salary increase would bring some relief to government employees.”