In the lead-up to the announcement of the federal budget, the Ministry of Finance has revealed initial proposals to increase salaries for government employees.

Sources within the ministry suggest a potential salary hike of 15 to 20 percent for federal employees, though final decisions will be made by the Prime Minister after consultations with the Finance Ministry and the Cabinet.

Despite these proposals, there are significant constraints. The International Monetary Fund (IMF) has emphasized the need for cost reductions and pension reforms, suggesting that substantial increases in salaries and pensions might not be feasible.

This has created a challenging scenario for the government, which must balance fiscal responsibility with the need to support its employees.

One of the key proposals is an increase in the monetization policy for bureaucrats. For officers up to grade 20, an increase from Rs 65,000 to Rs 105,000 has been proposed. For grade 21 officers, the monetization is proposed to rise from Rs 75,000 to Rs 120,000. Grade 22 officers could see their monetization increase from Rs 95,000 to Rs 155,000.

A 10% salary increase for employees across grades 1 to 22 is estimated to cost approximately Rs 80 billion. However, there are additional demands for a 200% increase in medical and conveyance allowances for employees in grades 1 to 16. Currently, these employees receive Rs 1,800 as conveyance allowance and Rs 1,500 as medical allowance. For grades 17 and 18, officers receive Rs 5,000 as conveyance allowance, and a similar 200% increase is proposed for them as well.

Employees in grades 1 to 16 received a disparity allowance of 25% in 2021 and 15% in 2022 to address salary differences between provincial and federal employees. There is a proposal to continue this disparity allowance to further reduce these discrepancies.

All these proposals are still in the preliminary stages. The final decisions will be made by the Prime Minister in consultation with the Finance Ministry and the Cabinet. The upcoming budget will reveal how these proposals are balanced with the IMF's recommendations and the government's fiscal policies.