The US state department has flagged a lack of adequate parliamentary and civilian oversight of Pakistan’s military and intelligence spending, while also raising concerns over limited disclosure of government debt and delays in publishing the executive budget proposal.The concerns were highlighted in the 2026 Fiscal Transparency Report, which assessed Pakistan’s public financial transparency and identified gaps in the country’s budgetary and fiscal disclosure practices.The report noted that Pakistan made its enacted budget and end-of-year financial statements widely available online. However, it said military and intelligence budgets remained outside adequate parliamentary or civilian public scrutiny.“The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight,” the report said.The US also criticised Islamabad for not publishing its executive budget proposal within a reasonable period.According to the assessment, this limits the time available for lawmakers and civil society to examine government spending before the budget is adopted.
US asks Pakistan to improve defence and debt transparency
The state department called for three key changes to Pakistan’s fiscal transparency framework.It urged Islamabad to make its executive budget proposal publicly available within a reasonable period, disclose detailed information about government debt obligations, including liabilities linked to state-owned enterprises, and bring military and intelligence agency budgets under parliamentary or civilian public oversight.The report also raised concerns about Pakistan’s disclosure of public debt, saying only limited information was available on debt obligations, including those of major state-owned enterprises.At the same time, the US assessment acknowledged some positive aspects of Pakistan’s public financial system.It said the country’s supreme audit institution met international standards of independence and noted that its audit reports were published in a timely manner and contained substantive findings.
Pakistan’s defence allocation rises to Rs 3 trillion
The US assessment comes against the backdrop of a substantial increase in Pakistan’s defence allocation for the 2026-27 financial year.In June, Pakistan’s federal government proposed allocating Rs 3 trillion for defence services, up 17.65 per cent from the previous year’s initial allocation of Rs 2.55 trillion, according to Dawn.The proposed defence services allocation amounts to about 2.08 per cent of Pakistan’s projected GDP of Rs 143.6 trillion and nearly 16 per cent of the federal government’s total outlay of Rs 18.77 trillion.Spending on civil works related to military infrastructure was projected to rise 7.92 per cent to Rs 363.16 billion, from Rs 336.49 billion previously.Military pensions are accounted for separately from the main defence services budget. The government has allocated Rs 822 billion for retired military personnel under the federal pension outlay, according to Dawn.The allocation for defence administration was set at Rs 10.9 billion, compared with Rs 7.9 billion in the outgoing fiscal year’s original budget. That allocation was later revised to Rs 11.75 billion.Major military imports and defence acquisitions are generally funded outside the main defence services allocation and remain undisclosed.The US state department’s assessment therefore highlights a distinction between Pakistan’s publicly disclosed defence allocation and the wider military spending that may not be fully visible through the country’s budgetary documents.
Defence spending remains a key transparency concern
The state department’s recommendations focus on bringing military and intelligence expenditure into the broader framework of public financial oversight.While the report recognised that Pakistan publishes key budget documents, it identified defence and intelligence spending, debt disclosure and the timing of budget publication as areas requiring greater transparency.The recommendations would require Pakistan to give lawmakers and the public greater visibility into military and intelligence allocations, as well as government liabilities linked to state-owned enterprises.
