Islamabad/Washington, Sunday, September 21, 2025 – The United States Department of State has urged Pakistan to enhance US Pakistan fiscal transparency by subjecting its military and intelligence budgets to parliamentary or civilian public oversight, as outlined in the 2025 Fiscal Transparency Report released on Friday, September 19, 2025.
In a region plagued by geopolitical tensions and economic vulnerabilities, the push for US Pakistan fiscal transparency underscores the need for accountable governance to foster investor confidence and regional stability. Pakistan’s defence allocations, forming a significant portion of its national spending, directly influence South Asian security dynamics, particularly amid ongoing border frictions with India. Enhanced public oversight Pakistan defense budget could mitigate perceptions of opacity, bolstering ties with international partners like the US while addressing domestic calls for equitable resource distribution.
US Department of State Highlights Gaps in US Pakistan Fiscal Transparency
The annual Fiscal Transparency Report, which evaluates budgetary practices across 140 governments, identifies key shortcomings in Pakistan’s fiscal management. During the review period, Pakistan’s enacted budget and end-of-year report were made widely accessible online, providing a substantially complete picture of planned expenditures and revenues, including natural resource revenues. However, the report notes that the government did not publish its executive budget proposal within a reasonable period, limiting opportunities for public scrutiny and informed debate.
Furthermore, only limited information on debt obligations, including major state-owned enterprise debt, was made publicly available. This opacity in debt disclosure hampers a full understanding of fiscal risks, especially as Pakistan navigates a total budget of PKR 17.57 trillion for the fiscal year 2025-26. Of this, PKR 9.7 trillion is earmarked for debt servicing, reflecting acute financial pressures.
The report commends certain strengths, stating that budget information was generally reliable and subject to audit by the supreme audit institution, which met international standards of independence. Audit reports were published within a reasonable period and included substantive findings. Additionally, Pakistan specified criteria for natural resource extraction contracts in law and made basic award information public, while its sovereign wealth fund maintained a sound legal framework with accessible procurement data.
Public Oversight Pakistan Defense Budget: A Core Recommendation
A pivotal concern in the report centres on the lack of adequate parliamentary or civilian public oversight Pakistan defense budget. “The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight,” the assessment states verbatim. This echoes longstanding critiques, as previous US reports have repeatedly flagged similar gaps in defence spending transparency.
To address this, the State Department recommends: “Subjecting the military and intelligence agencies’ budgets to parliamentary or civilian public oversight.” Such measures, alongside timely executive budget releases and detailed debt disclosures, are seen as essential steps to improve overall US Pakistan fiscal transparency.
Pakistan’s defence allocation for 2025-26 stands at PKR 2.55 trillion, marking a nearly 20 per cent increase from PKR 2.12 trillion in the previous year. This hike occurs against a backdrop of slashed overall spending by 7 per cent, highlighting prioritisation of security amid economic revival efforts. Critics argue that without robust public oversight Pakistan defense budget, such increases risk exacerbating fiscal deficits and eroding public trust.
The report’s findings align with broader US efforts to promote fiscal accountability globally, tying transparency to foreign assistance and economic partnerships. In Pakistan’s case, these recommendations gain urgency as the country relies on external financing from institutions like the International Monetary Fund to stabilise its economy.
Progress and Persistent Challenges in Fiscal Practices
While the report praises Pakistan’s audit mechanisms, it underscores persistent hurdles in US Pakistan fiscal transparency. The supreme audit institution’s independence is a bright spot, enabling reliable oversight of general budget items. Yet, the absence of similar scrutiny for sensitive sectors like defence and intelligence remains a glaring issue.
Natural resource management shows promise, with legal frameworks ensuring procedural fairness in contract awards. Publicly available data on these awards supports transparency, though deeper disclosures could further enhance accountability.
Debt-related opacity poses another challenge. The limited availability of information on state-owned enterprise debts obscures the full scope of liabilities, potentially deterring investors wary of hidden fiscal burdens.
Background
The 2025 Fiscal Transparency Report continues a tradition of annual assessments mandated by US law, focusing on how governments publish, audit, and manage public funds. For Pakistan, it builds on prior editions that have consistently highlighted needs for improved US Pakistan fiscal transparency, including in debt reporting and legislative review of security expenditures.
Pakistan’s fiscal year 2025-26 budget, presented in June 2025, reflects efforts to balance defence imperatives with economic reforms. The 20 per cent defence hike addresses regional security concerns, but the report’s call for public oversight Pakistan defense budget arrives at a critical juncture, as Islamabad seeks to rebuild international confidence post-economic turbulence.
Pakistan’s official response to the report remains pending, with no statements issued from the Ministry of Finance or Foreign Affairs as of Sunday, September 21, 2025, 4:35 PM.
What’s Next for US Pakistan Fiscal Transparency
As bilateral dialogues continue, the recommendations could influence upcoming US-Pakistan engagements on economic cooperation. Implementing public oversight Pakistan defense budget might not only elevate US Pakistan fiscal transparency but also signal Pakistan’s commitment to democratic accountability, potentially unlocking greater international support. Observers await Islamabad’s stance, which could define the trajectory of these reforms in the coming months.
Published in SouthAsianDesk, September 21st, 2025
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