use Data::Dumper;

my %vars;

# set initial variables
$vars{'INST'} = 'C';

open my $fh, "<", 'file' or die $!;
while (<$fh>) {
	chomp;
	m/^(\w+)=(.*)$/ or next;
	my ($var, $value) = ($1, $2);

	$value =~ s/\$([a-z]+)/ $vars{$1} /gie;
	$vars{$var} = $value;
}

print Dumper(\%vars);

##</code><code>##

# source file:
VAR1=$INST/dirivebase/program
VAR2=$INST/origbase/data

# output:
$VAR1 = {
          'VAR1' => 'C/dirivebase/program',
          'INST' => 'C',
          'VAR2' => 'C/origbase/data'
        };