ISLAMABAD: The budget circular for fiscal year 2025-26 calls for a new set of information to identify and tag green/ climate components of revenues, as four main base categories have been identified, under which the tax or non-tax revenue can be classified.
The Finance Division has issued budget circular for 2025-26, which also stated that the estimates of development expenditure fiscal year 2025-26 should not include any scheme which has not been approved. Further, no new post shall be created in the divisions/departments/sub-ordinate offices/organiza-tions/entities except with the prior approval of the Finance Division.
It stated that there are two kinds of revenue resources in federal government of Pakistan; i.e., tax revenue which falls in the domain of the Federal Board of Revenue (FBR) and non-tax revenue which is with the Finance Division.
The relevance of non-tax revenue to climate and environment can be determined by assessing the nature of the activity on which this non-tax has been levied upon. If an activity has specific proven negative impact on environment and climate, then the tax imposed on such activity is having positive correlation with climate.
It stated that the use of fossil fuels is impacting climate and environment. If government places a levy on use of fossil fuels, that levy will be considered climate or environment related. Another example could be collecting a fine or any other fee on use of plastics, or harmful wastes.
In order to determine if the tax or non-tax is climate or environmentally friendly, the tax base has to be identified. Four main base categories have been identified for federal government, under which the tax or non-tax revenue can be classified. This classification has been designed in line with global practices. Some of these categories may not exist in Pakistan at the moment but considering the exponential momentum in reforms for climate change in the country, these new categories may be introduced in near future or in long run.
This list will evolve as we move towards strengthening of our adoption and mitigation measures, it added.
The circular noted that the foreign exchange component of estimates of development expenditure is required to be shown distinctly together with the source from which it will be met (i.e., whether from own resources or from foreign resources). Provision made for foreign exchange expenditure would not be available for rupee component expenditure or vice versa and no re-appropriation is permissible between the provision for rupee and foreign exchange expenditure.
Foreign Exchange component should be shown (wherever necessary). Foreign exchange bifurcation is also required against the space provided separately for (i) foreign resources and (ii) own resources.
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.
In such cases in respect of a foreign aided scheme/project, the amount to be spent in local currency out of the foreign aid (reimbursable) should be clearly indicated under the scheme/project.
All vacant/redundant posts (lying vacant/idle for more than three years) are required to be indicated and abolished as per Financial Management and Powers of PAOs Regulations, 2021.
Copyright Business Recorder, 2025
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