The United Stated deducted $55 million under its reimbursement programme -- for expenses incurred by Pakistan on the war on terror -- after American auditors raised objections to a claim submitted by the country.

US authorities deducted the amount, while releasing only $101 million out of Pakistan's claim of $156 million for expenses incurred on the campaign against terrorism till April 2008, said Shaukat Tarin, financial adviser to the prime minister.

The move was the outcome of objections from American auditors as well as a change in the US format for releasing such funds, he said.

"The Pakistan government will re-submit a case for the release of the amount which has already been spent from its resources on the war on terror," Tarin told reporters.

Tarin said increased defence spending due to tensions with India in the wake of the Mumbai terror attacks [Images] had put pressure on the national exchequer.

Pakistan's balance of payment position will improve after a loan of $700 million from donors is received by the end of March. The country will get $500 million from the World Bank in February and another $200 million from the Asian Development Bank [Get Quote].

The country recently received a loan of $500 million from China and $100 million from the ADB.