But, before flying out to join an Asian Development Bank board of governors meeting last week, Finance Minister M Saifur Rahman had said, whatever happens, the new pay scale would be formally announced by May 20 and implemented from June.

According to the memorandum prepared for International Monetary Fund, the government projects allocating an additional Tk 1,600 crore in FY 2005-06 and also in FY 2006-07 for the new pay scale.

The revised current budget will be tabled in parliament on June 9, the day the finance minister will also propose the budget for FY06. The original budget of the current FY earmarked Tk 13,477 crore in salaries for the government staff.

Introduction of the new pay scale will not affect the economy, the memorandum on the government's economic and financial policies for April 2005 to June 2006 assures IMF.

"To safeguard macroeconomic stability the overall increase in the government wage bill will be phased in over three years, totalling about Tk 40 billion [4,000 crore]," the memo says.

"The increased spending on wages will be partly offset by cuts in non-priority spending to preserve pro-poor expenditures. Moreover starting in FY06, the government will combine attrition with a selective hiring freeze to reduce employment while eliminating unnecessary and redundant posts," it explains.

To ensure medium-term fiscal sustainability, the government will work on civil service reform to rationalise government employment, decompressing the pay scale, establishing a systematic and transparent performance evaluation procedure for merit-based salary increases and promotion, and introducing a tighter link between pay and performance, elaborates the memorandum.

Earlier on April 30, a five-member secretary-level committee headed by Cabinet Secretary Dr Sadaat Hossain in its final recommendation to the cabinet proposed four alternative pay structures with the highest requiring Tk 5,213 crore additional money and the lowest Tk 3,975 crore additional expenditures. The proposed mid-range scales require Tk 4,541 crore and Tk 4,286 crore.

The secretarial committee in its proposal also noted that, in view of government employees' expectations, resource constraints and living cost, implementing the second highest pay scale with Tk 2,500 basic pay at the lowest and Tk 24,000 at the highest end is the most logical option.

The highest proposed pay scale designates Tk 2,600 at the lowest and Tk 25,000 at the highest end.

The third highest pay scale needs Tk 4,286 crore extra to implement, with the lowest basic pay at Tk 2,450 and the highest at Tk 23,500. And the lowest pay scale proposed has a Tk 2,400 basic at the lowest end and Tk 23,000 at the highest.

The new scale will take a retrospective effect from January this year.