WASHINGTON: The United States has called on Pakistan to subject its defence and intelligence budgets to parliamentary or civilian public oversight, describing it as a key step to improve fiscal accountability and transparency.

The recommendation appears in the US Department of State’s 2025 Fiscal Transparency Report, released on Friday. The annual report reviews the openness of budgetary practices worldwide, assessing how governments publish, audit, and manage public funds.

“The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight,” the report stated in its Pakistan section. It added that “steps Pakistan could take to improve fiscal transparency include… subjecting the military and intelligence agencies’ budgets to parliamentary or civilian public oversight”.

The report also urged Pakistan to ensure the timely publication of its executive budget proposal. “The government… did not publish its executive budget proposal within a reasonable period,” the assessment noted, calling for earlier release of the document to enable informed debate and scrutiny.

On debt disclosure, the report found that “the government made only limited information on debt obligations, including major state-owned enterprise debt, publicly available.” It recommended “disclosing detailed information on government debt obligations, including for state-owned enterprises”.

Fiscal Transparency Report commends Pakistan’s audit institution, says it ‘meets international standards of independence’

While highlighting these shortcomings, the State Department acknowledged progress in other areas. It noted that Pakistan’s “enacted budget and end-of-year report [were] widely and easily accessible to the public, including online,” and that budget information was “generally reliable and subject to audit by the supreme audit institution.”

It also praised the independence of Pakistan’s supreme audit institution, saying it “met international standards of independence” and published audit findings within a reasonable period.

The report further observed that Pakistan “specified in law or regulation, and appeared to follow in practice, the criteria and procedures for awarding natural resource extraction contracts and licences,” and made “basic information on natural resource extraction awards publicly available”.

This year’s assessment echoes concerns raised in previous State Department reports, which have repeatedly pointed to gaps in debt transparency and the lack of legislative oversight of defence spending.

The report comes as Pakistan grapples with severe budgetary pressures. The government presented its budget for the fiscal year 2025-26, totaling Rs17.57 trillion. Of this, Rs9.7tr has been allocated for debt servicing, while Rs2.55tr has been set aside for defence — a nearly 20 per cent increase compared to last year.

The US recommendations are aimed at bolstering public trust and international confidence in Pakistan’s financial management at a time when external financing and investment remain critical to economic stability.

The 2025 Fiscal Transparency Report is a global assessment, evaluating fiscal practices in 140 governments and entities. It examines whether countries publish executive budgets in a timely manner, disclose debt obligations (including state-owned enterprises), maintain independent audit institutions, and ensure that sensitive spending — such as defence and intelligence — is subject to legislative or civilian oversight.

Published in Dawn, September 21st, 2025