ISLAMABAD, April 4: The government is expected to announce in the next budget a 20 per cent increase in salary and pensions of government employees and six special honoraria payments to all officials of the finance ministry.

Informed sources told Dawn on Wednesday that according to initial estimates of the finance ministry the financial impact of the salary and pension increase would be around Rs25-30 billion.

An official said the authorities had initially considered to revise the basic pay structures of government employees, but later decided to offer an ad hoc relief to help them cope with inflation because there was no adequate time to call meetings of the Pay and Pension Commission to firm up long-term proposals.

He said the 20 per cent increase would be across the board for all grades and cadres.

The official said an additional option under consideration was monetisation of housing facilities of senior government officials of grade 20-22 by offering them Rs55,000 to Rs70,000 a month to pay as rent for houses of their choice on the condition that they would vacate official residences.

In order to implement this scheme, he said, the authorities were taking into consideration the initial work done by a previous Pay and Pension Commission headed by State Bank’s former governor Dr Ishrat Hussain. He said a committee headed by Deputy Chairman of the Planning Commission Dr Nadeemul Haque was in the process of finalising its recommendations. The scheme will initially be for federal government officials in top three basic pay scales.

The official said the government was expected to increase the house rent allowances by 200-300 per cent for employees of grades 1 to 19, but that would take some time.

He said the finance ministry was proposing six special honoraria payments -- equivalent to six basic salaries -- for all officials working under five federal secretaries associated with the ministry of finance and economic affairs and the Federal Board of Revenue for their extra work in the budget-making exercise.

Last year the government increased the salary and pensions by 15 per cent and also announced monetisation of transport facility for grade 20-22 officers with a monthly cash payment of up to Rs85,000. The monetisation policy has been implemented in a couple of ministries.

In the 2010-11 budget, the government allowed an ad hoc monthly allowance of 50 per cent of the basic pay which was merged into the basic salary last year.

The official said the PPP government had allowed a cumulative increase of 105 per cent over the past four years which, in terms of compound impact, worked out to about 135 per cent.