Finance Minister AMA Muhith has backtracked on his promise to implement the new pay scale as recommended by the Pay Commission from January this year, saying that it will take effect from July 1 next year.
“We will be able to execute the recommendations easily if the commission simplifies them. But it will be difficult for us to implement them if administrative reform is incorporated in the commission’s report,” he told reporters after meeting with an International Monetary Fund mission at his secretariat office yesterday. A six-member IMF mission was headed by Rodrigo Cubero.
Earlier, the finance minister in his budget speech promised to implement the new pay scale from January this year.
Even Prime Minister Sheikh Hasina in her speech at parliament announced that the next pay scale would be executed from this fiscal year.
The finance minister said, “It will take us time to execute the recommendations if the commission recommends reform of the public administration.”
The government formed the Pay Commission on November 24, 2013 and issued an order in this regard. The order came into effect from December 17.
As per the order, the Pay Commission was scheduled to submit a report on the salary hike of 13 lakh government employees within six months. However, the time limit could be extended if necessary, the order says.
Muhith said the government would get $ 500 million from the World Bank as budget support to reduce the budget deficit. “We will sign an agreement with the World Bank authority this fiscal year.”
About the condition on the budget support, he said one of the major conditions was to make reform of local government along with ongoing reforms of the country’s bank sector. But he did not elaborate the matter.
For the first time, the Awami League government would get budget support from the global lender, he added.
In reply to a query, the finance minister said the IMF’s ongoing extended credit facility programme would not extend as the country’s balance of payment was strong. “We want another IMF credit programme which may be discussed in a meeting in Washington next month,” he said.
He also said the next IMF credit programme would start from the middle of next fiscal year when I would be busy with implementing the new pay scale.
Regarding reforms of VAT system, Muhith said the government would not be able to complete reforms of VAT this year which might be extended until 2016. “But I am not sure whether the IMF mission will agree with me.”
The visiting IMF team had already expressed dissatisfaction over sluggish progress in VAT reforms.
The IMF officials assigned to see progress in reforms in various areas against IMF’s conditions under a three-year ECF met the National Board of Revenue.
The NBR said it would need another year to implement the VAT and Supplementary Duty Act 2012 due to re-tendering to procure software to build an integrated VAT administration system.
But the IMF team, reminding the tax authority of the government’s commitment to make the law effective from July 1, 2015 hinted that the delay might affect timely execution of the ECF programmes, said meeting sources.
The VAT law implementation was one of IMF’s major conditions against release of the fund under the ECF scheme of $1 billion. The IMF had released about $704.3 million in five instalments.
The IMF also wanted to know why the software procurement tender was cancelled.
