New Delhi: In a bid to enhance consumer spending and back economic activity, Nepal has decided to revamp how it pays government employees, as it moves away from a monthly salary system to a fortnightly payout model.
The Finance Ministry has granted its nod to the move. It has communicated the decision to the Financial Comptroller General’s Office. The Office has been asked to roll out the changes soon, news agency PTI said.
Under the new model, all employees will be given their salaries in two equal instalments every 15 days, instead of a single payment at the end of the month.
What’s behind the move
As per officials, the move is meant to ensure timely cash flow for the staff while also boosting more consistent spending in the economy.
By increasing the frequency of payouts, the government aims at keeping consumer demand steady throughout the month instead of seeing an early surge followed by a quick decline.
The change is being seen as a significant departure from a decades-old system. It is being considered as a structural reform within the administrative framework.
The move, officials say, is likely to help ease financial pressure on middle-class employees, who often grapple with expenses towards month-end.
Govt staff hail the decision
Government employees have backed the move, pointing out that it will make it easier to manage recurring expenses such as school fees, utility bills and daily household expenses. Regular inflows every two weeks are also likely to reduce reliance on short-term borrowing.
According to economists, the shift may also be of advantage to small businesses and retailers as it eases consumption patterns. They underline that the demand may now remain more balanced rather than a spike in spending at the beginning of the month followed by a slowdown.
The salary model showcases pay practices in some parts of the countries like the US and Australia. It is likely to be implemented in phases. If the practice succeeds, it could serve as a model for other economies in the region seeking to enhance growth driven by consumption.