HYDERABAD, Jan 1: The Hyderabad District Government is required to present a new budget in the district council as the Sindh government has refused to approve a deficit budget passed by the council at its meeting on June 23.

A district government official source told this correspondent here on Thursday that all the expenditures being incurred in day-to-day affairs could be considered "irregular".

He said finance department officials were working on the new budget that would probably be presented in the second week of January. DCO Mohammad Hussain Syed confirmed that it was decided at a meeting, presided over by him, that a new budget would be presented in the district council as per provision of section 112 of the Sindh Local Government Ordinance, 2001.

The district council had passed a budget of Rs4524.654 million for 2003-04 against a Rs3761.649 million budget of 2002-03, having a deficit of Rs37.187 million. The budgetary estimates were sent to the Sindh finance department for approval.

The district government source said the finance department had sent a letter to the district government in which it referred to section 112(5) and 120(1) of the SLGO, mentioning therein that no local government should incur any debt and budget should not be approved if sums required to meet estimated expenditures exceeded estimated receipts and constraints specified in section 119 were not complied with.

In the light of this section, he maintained, the budget was deemed to be void and if the district council did not meet requirements of the section, the budget would be considered a mere recommendatory document or a proposal to be approved by the finance department.

Answering a question whether expenditures being made on development schemes and on non-development heads were illegal, the source pointed out that the expenditures could be considered "irregular" as the budget had not been approved.

He said district government officials were considering the issue. He said to utilize funds of different development and non- development heads, a formula prescribed in the SLGO was being applied to give such expenditures a legal cover.

The source said in case the budget was not passed according to this formula, current expenditures should not exceed last year's budgetary expenditures. The DCO maintained that such problems were arising since it was a new system and said once everyone had a good understanding of provisions of the SLGO, the issues would be overcome.

On Oct 2, the EDO, finance, Syed Sikandar Ali Shah, sought an approval from the district council that until new expenditures were approved, the old system of meeting the expenses should be restored. The approval was accorded.