Nepal’s Economy: Benefits of the Government’s Bi-Monthly Salary Payment Initiative
Image source, Getty Images
The government has implemented a decision to pay civil servants on a bi-monthly basis, disbursing salaries twice a month.
According to officials, salary payments for staff of the Ministry of Finance and the Office of the Auditor General began on Wednesday under this new system.
The Office of the Auditor General told us this new practice is expected to have multi-dimensional impacts on the country’s overall economy.
Reactions to the government’s move have varied, with some viewing it positively while others prefer the previous monthly salary system.
The Ministry of Finance mentioned that the pilot project started with federal employees and plans to gradually extend it to provincial levels.
How Will the Salary Be Distributed?
Officials from the Office of the Auditor General said that each month will be divided into two parts for salary disbursement using payment certificates.
“Since some months have 32 days and others 28, there will be slight differences. One half of the salary is sent on the 16th and the other on the 1st. All salary and deductions are split evenly,” explained office spokesperson Deepak Lamichhane.
Shobhakant Paudel, Auditor General, clarified that legally there will be no change in the salary or benefits received by civil servants.
“Payments such as provident funds, citizen investment funds, social security taxes, and insurance, which were previously made monthly, will now be calculated on a 15-day basis and paid in two installments,” he added.
“This change will not reduce or alter the services and benefits available to civil servants.”
Expansion from Federal to Provincial Levels
Officials have announced plans to extend this new payment practice, which started at the federal level, to the provinces.
Auditor General Paudel confirmed that necessary reforms to the payment system have already been implemented.
“We chose to begin this practice formally at the federal level to monitor for any possible issues. With government directives, it can be extended constitutionally to the provinces,” he explained.
“Gradually, this system will be implemented at local levels and other government departments across the country.”
Paudel informed that salaries for around 100,000 federal civil servants are currently processed through his office.
“Salaries for federal public servants, including police and military personnel, are also disbursed by this office,” he added.
What Are the Potential Benefits?
Officials believe that bi-monthly salary payments will significantly contribute to invigorating the economy.
They anticipate positive impacts extending from small and medium enterprises to digital commerce sectors.
According to Paudel, bi-monthly payments will boost employee motivation and morale.
Employees will be less likely to need loans mid-month, and it will improve opportunities for leisure activities during bi-weekly rest days.
“This system facilitates timely expenses for employees, creating an environment that supports both spending and recreation,” he commented.
Image source, NRB
Paudel explained that these individual benefits for civil servants will also support the broader economy.
“From an economic perspective, when employees spend their income, it boosts the entire service sector. Small and medium enterprises and businesses will also become more active. Increased cash flow enhances economic dynamism,” he said.
“The government’s analysis shows that timely payments will increase service sector contributions overall, and this growth is certain.”
Officials expect this practice to positively impact the size of the economy as well.
“Approximately 9 to 10 billion rupees will be circulating in the market every 15 days. This will also expand the digital economy,” auditor general Paudel observed.
“With two digital payments per month, employees’ incomes and productivity will increase, producing positive effects across economic activities.”
“More transactions propel the economy forward. If transactions don’t happen and money only accumulates in banks, the economy won’t advance. Therefore, such transactions are essential,” Paudel emphasized.
Image source, EPA/Shutterstock
Diverse Opinions Among Employees
Some civil servants do not perceive a strong need for bi-monthly salary payments.
Especially among junior and mid-level employees, many feel this initiative will not offer significant benefits.
“While an active economy is positive, receiving money more frequently encourages faster spending,” a staff member working in the federal capital told us.
Bhavani Nyaupane Dahal, president of the Nepal Civil Service Organization, shared a similar perspective.
“Some employees have ended up spending their salary more quickly as a result. Also, there were no major issues with monthly payments,” she told us.
Dahal further noted that since complaints about delayed salary disbursements had been common, the new timely payment system may prove beneficial.