05 December 2004	Sunday	22 Shawwal 1425

ISLAMABAD, Dec 4: The government has devised a plan to effectively prevent misuse of foreign aid and development loans.

Sources told Dawn here on Saturday that the government had directed the economic affairs division to furnish estimates of foreign aid receipts for both 2004-05 (revised) and 2005-06 (budget), together with actuals for 2001-2002 and 2003-04.

According to the finance division's 'Budget Call Circular 2005-06,' the whole pattern of budget-making exercise was being changed to streamline the finance division's financial and administrative structure.

From the next financial year, the foreign exchange component of estimates of development expenditure is required to be shown distinctly with the source from which it will be met (i.e. from own resources or from foreign aid). When the foreign exchange components are to be financed (wholly or partly) from foreign aid, the sources and type of aid should invariably be indicated in the budget provision for the relevant project/scheme and at the end of relevant New Item Statement.

Currently, the provision made for foreign exchange expenditure is not available for rupee expenditure or vice versa and no re-appropriation is permissible between the provision for rupee and foreign exchange expenditure. And now from 2005-06, this will be kept in view while framing the estimates for rupee as well as foreign exchange requirements.

And in case of import of machinery and equipment, orders for import will not be placed unless adequate budget provision has been made for payment of duties and taxes.

Certain agreements of foreign aid state that the government of Pakistan should initially incur the expenditure in local currency and thereafter the equivalent amount would be reimbursed on actual basis by the donor agency. "If such is the case in respect of a foreign aided scheme/project, the amount to be spent in local currency out of the foreign aid (reimbursement) should be clearly indicated under the scheme/project on the New Item Statement," said the new budget call circular.

An officer signing budget orders and NISs in the administrative ministry/division/department and deputy financial advisors should indicate their telephone number clearly on every budget order and NIS document. No budget order or NIS will be accepted, in which employees-related expenses/establishment charges have been claimed, if not duly supported with the information asked for in new format for budget order being circulated to all the ministries and divisions.

The budget division of the ministry of finance has been asked to submit by Dec 1, an estimate of overall resources likely to be available in the year 2005-06 for financing the new Public Sector Development Programme.