Bangladesh 9th Pay Scale Decision Delayed Until IMF Loan Talks in October

Dhaka, July 28, 2026 — The Bangladesh government is likely to announce the long-awaited ninth national pay scale for public sector employees only after concluding negotiations with the International Monetary Fund on a new loan programme in October, with the final decision depending largely on the lender's approval, officials familiar with the matter said. The development signals the growing influence of multilateral lenders on Bangladesh's domestic fiscal policy choices. 💰

⚠ The IMF has already advised the government to defer implementing the new pay scale by at least two years, citing fiscal pressures and weak revenue mobilisation. Following the recommendation, the government has adopted a more cautious approach to a proposal that has been under consideration for over a year and would significantly reshape public sector compensation.

📜 PM Reviews Fiscal Implications

🏛 On July 26, Prime Minister Tarique Rahman met Finance Ministry officials to review revenue collection, public expenditure, the fiscal impact of the proposed pay scale, and the overall macroeconomic outlook. During the meeting, Finance Minister Amir Khosru Mahmud Chowdhury outlined the additional expenditure required to implement the new salary structure.

📊 The premier instructed officials to conduct a more detailed review, particularly considering the risk of higher global energy prices, pressure on domestic banking sector liquidity, and the need to maintain fiscal discipline during a sensitive period of macroeconomic adjustment. The meeting reflects the government's careful balancing act between fulfilling a long-standing political commitment to public sector employees and adhering to fiscal prudence counselled by multilateral lenders.

🌏 October IMF Talks on the Sidelines

🤝 Officials said the government's final negotiations with the IMF are expected to take place on the sidelines of the World Bank-IMF Annual Meetings in Bangkok from October 12 to 18. According to officials, the IMF's position on increasing permanent non-development expenditure, particularly public sector salaries, will be a key factor in determining whether the pay scale moves forward.

📜 A senior Finance Ministry official said an IMF delegation visiting Bangladesh from July 12 to 16 discussed salary and allowance budgeting with the Finance Division. IMF representatives reportedly said Bangladesh's current revenue base is not strong enough to support a significant increase in government employee compensation without jeopardising broader fiscal stability.

⚠ The lender also noted that government spending on social safety net programmes — including Family Cards, Farmer Cards, and subsidies — is rising rapidly while revenue growth has lagged behind. Given persistent inflation and limited fiscal space, the IMF believes introducing the new pay scale now could undermine the country's broader macroeconomic stabilisation efforts.

📋 Revised Framework Already Prepared

✅ Officials, however, said the government has not abandoned the proposal. A 10-member high-level committee led by Cabinet Secretary Nasimul Ghani has already prepared a revised framework for the pay scale after reviewing recommendations from:

• 📜 National Pay Commission 2025
• 🧭 Bangladesh Judicial Service Pay Commission 2025
• 🎖️ Armed Forces Pay Committee 2025

📄 The proposal, with some revisions, has been submitted to the Finance Ministry and presented to the prime minister. A senior official, requesting anonymity, said the government is now considering phased implementation or alternative approaches to reduce the fiscal burden. The strategy is expected to be finalised before the October IMF meeting.

💰 Tk 106,000 Crore Annual Cost

📊 The process to revise the salaries began under the interim government, which formed the National Pay Commission 2025, led by former Finance Secretary Zakir Ahmed Khan. The commission submitted its report on January 22, 2026, recommending salary and allowance increases of 100 percent to 140 percent. The key proposed changes include:

• 💲 Minimum basic salary: Tk 8,250 → Tk 20,000 (142% increase)
• 💲 Maximum basic salary: Tk 78,000 → Tk 160,000 (105% increase)
• 🎍 Baishakhi allowance: 20% → 50% of basic salary
• 🚗 Transport allowances: Revised for grades 10 to 20
• 📋 Other benefits: Restructured across all grades

💰 The commission estimated the recommendations would require an additional Tk 106,000 crore annually — a figure that has prompted significant concern within both the Finance Ministry and the IMF given Bangladesh's current revenue trajectory.

📈 FY27 Budget Provision

📅 In the FY2026-27 budget speech, the finance minister announced plans to implement the new pay structure in phases from July and allocated Tk 54,572 crore more for the public administration sector than in the revised budget of the previous fiscal year. According to officials, around Tk 44,000 crore of the additional allocation has been earmarked for the potential implementation of the new pay scale for:

• 👥 Government employees
• 📚 MPO-listed teachers
• 🧓 Pensioners

📊 However, the actual disbursement of these funds remains contingent on the IMF's position and the government's final decision following the October meetings, officials indicated.

👥 Economists: Pay Scale Overdue but Revenue Critical

📜 Economists say a new pay scale is overdue, noting that government employees have not received a salary revision since 2015 while high inflation has significantly eroded their purchasing power over the intervening decade. The case for revision is particularly strong given the inflationary pressures that have built up since 2022.

⚠ However, economists also warn that Bangladesh's tax-to-GDP ratio remains among the lowest in South Asia and revenue mobilisation has yet to improve sufficiently to fund a major permanent increase in public sector compensation without crowding out other priority spending or widening the fiscal deficit.

🏛 Researchers at the Centre for Policy Dialogue (CPD) have cautioned that implementing the new pay scale without strengthening revenue collection could force the government to rely more heavily on domestic and foreign borrowing, widening the budget deficit and adding pressure on the economy at a time when external ratings agencies have already adopted a cautious stance on Bangladesh's sovereign credit profile.

📈 Broader Macro Context

🌏 The delay in the pay scale announcement comes at a sensitive moment for Bangladesh's macroeconomic management. International ratings agency S&P Global on July 27 revised the country's sovereign outlook to negative, citing weak banking sector, fiscal constraints, and elevated external risks. The IMF's emphasis on fiscal prudence aligns with the broader international assessment that Bangladesh needs to strengthen its revenue base before undertaking major new expenditure commitments.

📊 For the country's approximately 2 million government employees and a similar number of pensioners and MPO-listed teachers, the wait for the ninth pay scale continues. While the political commitment to a revised pay structure remains intact, the timing and scope will be shaped increasingly by Bangladesh's engagements with the IMF and other multilateral lenders — a dynamic that underscores the new reality of Bangladesh's fiscal policy in an era of constrained public finances and heightened external scrutiny.

📊 The October IMF meetings in Bangkok will therefore be watched closely not only by economists and international investors but also by the millions of Bangladeshis whose household budgets depend, directly or indirectly, on government compensation levels.