ISLAMABAD, Jan 26: The United States withheld $55 million under its reimbursement programme for expenses incurred by Pakistan on the war on terror after US auditors raised objections, Adviser to Prime Minister on Finance Shaukat Tarin said here on Monday.

“The Pakistan government will re-submit a case for the release of the amount which has already been spent from its resources against the war on terror,” he said.

Talking to reporters after attending the launching ceremony of the code of conduct for members of the Pakistan Micro-financing Network, he said that after the deduction Islamabad received $101 million from the US under the head.

Mr Tarin said the country’s balance of payment position would improve after a loan of $700 million from donors was received by the end of March.

He said the country would get $500 million from the World Bank in February and another $200 million from the Asian Development Bank. Pakistan has recently received loan of $500 million from China and $100 million from the ADB.

He said the fiscal deficit had dropped to 1.9 per cent of the GDP against the target of two per cent fixed for the first half of the current fiscal year. He attributed the decline to a fall in current account expenditures, 27 per cent increase in national income and reduction in development expenditures.

Mr Tarin said that provincial and federal departments already had Rs400 billion, including a big chunk of development funds. He said the Finance Division had asked the departments to first utilise the amounts previously released.

He said that an amount of Rs100 billion under the Public Sector Development Programme had been released during the first half of the current fiscal year and about Rs200 billion would be released in the second half. He said that development funds had been reduced after consultations with the Planning Commission.

Answering a question, he said that under an agreement with the International Monetary Fund, Pakistan was bound to eliminate subsidy on electricity by the end of June this year. However, he said the government would make a nominal increase in power tariff before the next fiscal year.

He said the National Electric Power Regulatory Authority had in November last year allowed an increase of 62 per cent in tariff and about 18 per cent increase had already been passed on to consumers.

He said the Finance Division would submit to the Friends of Pakistan group in February technical reports on areas needing financing. A ministerial-level meeting of the Friends of Pakistan is scheduled for mid-March.

Earlier addressing the ceremony, Mr Tarin said the microfinance sector in Pakistan had emerged as the second fastest growing sector in the world, with 1.8 million clients.

He announced that the Benazir Income Support Programme would be linked with micro-financing projects and in future the government would provide micro-financing to the beneficiaries of the programme. “We will also provide insurance cover to the beneficiaries and introduce skill development programme.”