ISLAMABAD: The federal cabinet has approved 18 percent increase in the budget of Ministry of Foreign Affairs (MoFA) to Rs 24.995 billion from Rs 21.175 billion earmarked for 2019-20 to meet currency devaluation and unforeseen expenditure, well informed sources told Business Recorder.

MoFA stated that a budget of Rs 21.175 billion was allocated to it for the current financial year. Approximately 90 percent of the budget is spent in the Missions abroad in US dollars and other major international currencies. The current budget is based on an exchange rate of $1 = Rs 140. However, due to depreciation of Pak rupee against US dollar and other major international currencies and unforeseen expenditures, the ministry is facing a substantial shortfall of Rs 3.820 billion, which is seriously impacting the smooth functioning of Missions.

MoFA further argued that the funds released under the 4th quarter are insufficient to meet even obligatory expenditure such as employees related expenses, rent of official/ residential buildings, education subsidy, medical charges and employees' retirement benefits.

The sources said, MoFA has also had to meet substantial unforeseen expenditure during the financial year on account of law charges related to cases involving Pakistan's national interests.

The question of currency fluctuation and its impact on budget was examined in detail by the Pay and Pension Committee in 2005. On the recommendation of the committee, the then prime minister approved the summary of March 11, 2005 which stated that" the budget of MoFA would be calculated and worked out on the basis of basket of currencies e.g. Euro, Pound Sterling, Swiss Franc and Japanese Yen, instead of US dollar only."

MoFA stated that reduction in the budget mainly occurs due to the depreciation of Pak Rupee against major international currencies, it results in substantial shortfall each year and is met through additional funds provided by the Finance Ministry.

The sources said, MoFA submitted the proposal to ECC of the Cabinet for provision of additional funds of Rs 3.820 billion in its budget of current year 2019-20 to offset impact of devaluation of Pak Rupee against US dollar and substantial unforeseen expenditures. The ECC of the Cabinet approved the proposal of Rs 3.820 billion as Technical Supplementary Grant (TSG) on June 10, 2020 which was ratified by the federal cabinet in its meeting held on June 12, 2020.