The provisions of the constitution are not mathematical formulae having their essence in form, they are living institutions. Their significance is vital, real and not formal.

In order to secure fairness and accuracy in the receipts and disbursements of moneys and to save the moneys from wastefulness, the Constitution has kept federal government moneys separate from moneys which are either divisible between the federal government and the provincial governments or are held in trust with the governments.

Before the transfer of monies to the consolidated funds of the respective governments according to their share, as notified in the award, the following steps are required to be taken to ascertain the net proceeds of taxes: i) The moneys of the taxes meant for distributions between the federation and the provinces shall be paid into the "Divisible pool deposit account".

ii) On an agreed dates during a financial year, the Auditor General shall ascertain the taxes as collected by the CBR up to that date along with withdrawals made from the "Divisible pool deposit account" for the expenditure both direct and indirect incurred on their collections.

iii) The State Bank shall supply to the Auditor General moneys available as on that date in the "Divisible pool deposit account".

iv) On the basis of the award, the Auditor General shall certify the share of net proceeds of taxes of each government.

v) The Auditor General certificate is a final authority for withdrawal of moneys from the "Divisible pool deposit account" by the State Bank for payment into. (a) Federal consolidated fund deposit account; (b) Punjab consolidated fund deposit account; (c) Sind consolidated fund deposit account; (d) NWFP consolidated fund deposit account; (e) Balochistan consolidated fund deposit account;

The constitution, thus, kept the as certainment and the transfer of net proceeds of taxes to the federal and provincial governments out of the control of the federal government.

Contrary to the provisions of the constitution, the net proceeds of the taxes and duties are neither ascertained nor certified by the Auditor General. The federal government appropriates total proceeds of taxes and duties towards its own expenditure, leaving no balance for provincial share in federal taxes.

The provincial share in federal taxes for each financial year is determined by the ministry of finance. The funds for transfer to provinces are arranged out of borrowings, change in provinces cash balances, privatisation proceeds and money printing.

It is misapplication of resources. It deprives the provinces of their due share in the federal taxes, because the provincial share in the federal taxes is reduced by the amount of "Change in provinces cash balances".

Grants-in-aid: The distribution of the net proceeds of the taxes is effected on certain clearly defined principles by the NFC on a more or less permanent basis with a view to secure financial stability, economic progress and social development.

The share in the net proceeds is determined by the President on the recommendations of the commission. The recommendations of the commission are based on the scrutiny of a financial plan laid before the commission by each government.

These payments are transferred to the provinces out of the "Divisible Pool" and have been taken out of the control of National Assembly as well as the federal government. For an equitable settlement on distribution of resources between the federal government and the provincial governments, the Article 160(7) of the Constitution empowers the President to make, out of the federal consolidated fund, grants-in-aid of the revenues of the province in need of assistance. These grants-in-aid do not require the vote of the Parliament.

Taxes and duties are imposed by the Parliament under Article 73(2)(a) of the constitution. Taxes and duties so imposed are collected by the federal government. Provinces have no say either in their imposition or collection. Provinces have few sources to tap for their revenues.

Therefore, the provinces are always in need of assistance either due to some special need or when the share in the net proceeds of taxes of a province fell short of its requirements.

The Constitution is a document which affects the life, liberty and rights of the people. It also provides for governance of the country. It has to be kept alive to meet the social, moral, economic, political and legal requirements of the people.

It is the duty of the government to ensure compliance of the constitutional provisions. In order to secure and provide an equitable and fair distribution of resources of the country between the federation and the provinces, the constitution empowers the President to take care of the revenue requirement of a province through the making of grants-in-aid.

The making of grants-in-aid of the revenues of the province do not constitute ex gratia payments. Instead, the making of grants-in-aid of the revenues of the province in need of assistance is imposed, by the constitution, a financial liability upon the federal consolidated fund.

Additional revenue is required for the making of both grants-in-aid and loans to provinces. Appropriating these payments out of provincial share in federal taxes is a contradiction of the constitution.

Borrowing power: The NFC serves as an expert body to make recommendations to the provincial and the federal governments in the exercise of the borrowing powers granted to them by the constitution.

The commission exercises technical control over borrowings by recommending the quantum of the debt to be contracted and the sources which should be tapped for the defined re-productive projects. It also has the power to recommend that the particular sources should not be exploited.

Financial management has to be conducted with great sincerity, integrity, imagination, skill and care. A prudent limit or amount of borrowing for countries is that the borrower can generate, with the help of borrowed funds, additional income adequate for repayment and interest without any new burden and yet get a net increase in net income.

Net increase in income means improved standard of living of the people and per capita income. Under article 166 of the Constitution, "the executive authority of the Federation extends to borrowing upon the security of the Federal Consolidated Fund within such limits, if any, as may from time to time be fixed by an Act of the Majlis-e-Shoora (Parliament) and to the giving of guarantees within such limits, if any, as may be so fixed".

The word "extends" means, "to assess: to estimate: to calculate:" Thus, executives authority is limited to assess the amount of loan money required for a financial year.

The legislatures on their part are free to accept the amount so assessed or may reduce it or may reject it. The actual borrowing, however, shall be carried out by the executives, with in such limits as are fixed by an Act of Parliament.

The assessment of loans originates from the requirement of "other expenditure" as estimated under Article 80(2)(b) of the Constitution. To lend money which has already been borrowed constitutes on-lend. On-lend is not the expenditure.

To borrow so as to pay off an old loan is refund. Refund is not the expenditure. The term borrow as defined under Article 260 of the constitution includes the raising of money by the grant of annuities and loans shall be construed accordingly, while debt includes any liability in respect of any obligations to repay capital sums by way of annuities.

Thus, interest on debt can not be paid from loans. Therefore, loans can not be raised for: i. on lending of loans to corporations, autonomous bodies, provinces and others; ii. repayment of debt; and iii. payment of interest on debt.

The item 10 to the Federal Legislative List PART I reads "Public debt of the Federation including the borrowing of money on the security of the Federal Consolidated Fund; foreign loans and foreign aid".

Under Article 166 of the Constitution, the raising of moneys from within the country under the Act of Parliament, constitutes public debt. With the use of semicolon before the words" foreign loans and foreign aid", the federation, accordingly is authorized to stand in opposition to foreign loans and foreign aid as semicolon is used when there is balance or contrast between what is said in a pair of clauses.

Thus, foreign loans and foreign aid, both have been kept out of account from the federal consolidated fund. Government accounts are kept in single entry system and on cash basis. Expenditure classification vide Article 80(2) of the Constitution is regulated with reference to the source of funds as under:-

Charged expenditure is financed from fees received against services rendered or income earned from the employment of loans. Expenditure on revenue account is financed from the net proceeds of taxes and other taxes.

Other expenditure is financed from loans raised from within the country subject to the condition that each and every loan is amortised through the creation of a sinking fund. Thus, the Constitution permits the raising of loans only from within the country for reproductive projects.

The pole-star in the construction of a constitution is the intention of its makers. The rule of construction is "to intend the legislature to have meant what they have actually expressed".

Therefore, if the meaning of the language used in the constitution is unambiguous and is in accord with justice and convenience, it is self-executing. It matters not in such a case, whatever the consequences may be.

A reproductive project is one which not only bears the cost of interest on capital employed on it, but also contributes towards the repayment or amortisation of capital.

Article 81 (c) of the constitution bears out that the repayment of capital sums by way of annuities or the wiping out the capital through the creation of sinking funds constitutes debt servicing.

Under the annuity system, the instalment for the repayment of capital consists of principal as well as interest. The same is the case with the sinking funds instalment. In both cases, the instalments are paid out of the income earned from the employment of capital on reproductive assets.

The constitution, accordingly, imposed the expenditure on debt-servicing as a pecuniary charge on an income. Tax is an imposition. Loan is a liability. Both do not form part of 'earned income'. Thus, the constitution does not authorise to meet the expenditure on debt - servicing either out of tax revenue or from loans raised.

In disregard of the principles enshrined in the constitution, the federal government as well as each of the provincial government exercises borrowing powers without the recommendations of NFC and without the Act of the Parliament and the Provincial Assemblies.

The federal government exercises unique and unlimited powers to borrow without at all being bothered about the productivity of the uses to which borrowed resources are applied. Expenditures are incurred without regard to the sources of funds.

No accounting is done for identifying the liabilities created by on-lending of loans to corporations and autonomous bodies at a rate of interest lower than the borrowing rate of interest.

Loans are not amortised. Old loans are paid from the proceeds of new loans. Interest on debt is paid from loans. This practice has plunged the nation into the huge indebtedness.

Devaluation: In Article 23(4) of the State Bank of Pakistan Order, 1948, the value of Pakistan rupee was fixed equal to the weight measuring 0.268601 grams of fine gold for one rupee. (This value of the rupee was enacted under Section (2) of Article 30 of the State Bank of Pakistan Act. 1956).

Upon admission to the membership of the IMF on July 11, 1950, the initial par value of the Pakistan rupee equal to the weight measuring 0.268601 grams of fine gold for one rupee or Rs3.30852 per dollar was accepted by the IMF.

Money has no intrinsic utility. It acts as a medium of exchange and a measure of value Since December 1958, each and every lending programme supported by the IMF had been subject to the devaluation of the rupee.

By virtue of Article 25 of the Constitution, the value of the rupee equal to the weight measuring 0.268601 grams of fine gold for one rupee, enjoys the protection of law.

Despite this protection, the rupee has seen massive devaluation over the years, thereby, contradicting the wisdom of the Constitution under the conditionality of the IMF.