Civil servants will soon receive their salary bi-monthly in a move which the Ministry of Finance hopes to improve personal financial management among employees as well as boost local economy.

The new salary system will also affect allowances but not the annual bonus, according to the ministry.

The pilot scheme will be implemented in stages from January 2018, starting first with officers and staff of the Ministry of Finance and the Prime Minister’s Office. It will affect both monthly-paid and daily-paid employees.

According to information disseminated to staff during a briefing held yesterday, the initiative will first be introduced as a pilot scheme to ensure smooth running of the new salary system and to get feedback from government officers.

A previous study showed that Bruneians owed over $3 billion in consumer debt, 65 per cent of which came from unsecured lending via credit cards and personal loans.

Senior officials at the Ministry of Finance yesterday explained how the bi-monthly payroll will not affect employees’ banking and loan commitments as the government has already negotiated with financial institutions to streamline their services with the new salary system.

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On its website, the ministry published a Q&A to address public concern over the new salary system. For loan repayments, banks will hold half of the payable amount during the first salary payout (mid-month) and will deduct the full amount on the second monthly payout (end of the month).

Similarly, any government allowances owed to civil servants will also be split into two payments. However, bonuses are not affected and will continue to be paid in full.

The bi-monthly salary system will only affect government ministries. Semi-government offices and the private sector remain unaffected, but may take similar initiatives if they wish.

The government has taken various initiatives to ensure the public remain financially responsible, with the May 2005 loan cap being one of the most notable moves introduced to reduce consumer debt. It was introduced after a 2003 study showed that Bruneians owed over $3 billion in consumer debt, 65 per cent of which came from unsecured lending via credit cards and personal loans.

For a slideshow of the Ministry of Finance’s briefing on the new salary system, click here.