• State Dept cites military budget lacks scrutiny
• FO rejects criticism, says Islamabad follows IMF-backed practices

WASHINGTON: A report by the US State Department has said that Pakistan needs to strengthen parliamentary oversight of public finances by improving the timely disclosure of budget proposals, government debt and other fiscal information.

The State Department’s 2026 Fiscal Transparency Report, an annual assessment, identified several areas where greater transparency and oversight were needed, including the timely publication of the executive budget proposal and fuller disclosure of government debt obligations, particularly those of major state-owned enterprises.

“During the review period, the government made its enacted budget and end-of-year report widely and easily accessible to the public, including online,” the report said.

At the same time, it noted that Pakistan “did not publish its executive budget proposal within a reasonable period”.

The department said timely access to the government’s proposed budget was important for public scrutiny of spending and revenue priorities before the budget was formally approved.

The report recommended that Pakistan make its executive budget proposal publicly available within a “reasonable period”, allowing parliament and the public greater opportunity to examine government spending plans.

The assessment also pointed to gaps in information about Pakistan’s financial liabilities. It said the government “made only limited information on debt obligations, including major state-owned enterprise debt, publicly available”.

Greater disclosure of such obligations would provide a clearer picture of the government’s overall financial position and allow legislators and the public to better assess the potential fiscal risks associated with state-owned enterprises.

Despite these shortcomings, the report found that Pakistan’s publicly available budget documents contained substantial information about government finances.

“Publicly available budget documents provided a substantially complete picture of most of the government’s planned expenditures and revenues, including natural resource revenues,” it said.

The State Department also gave a broadly positive assessment of Pakistan’s public financial auditing system. It noted that the budget information was “generally reliable and subject to scrutiny by the country’s supreme audit institution”. The report further found that the supreme audit institution met international standards of independence and that its findings were made available to the public within a reasonable period.

It also examined Pakistan’s handling of natural resource contracts and licences. It found that the government had established legal and regulatory criteria and procedures for awarding contracts and licences for natural resource extraction and appeared to follow them in practice.

Three areas for improvement

The report identified three principal steps Pakistan could take to improve fiscal transparency.

The first was making the executive budget proposal publicly available within a reasonable period. The second was the disclosure of detailed information on government debt obligations, including those of state-owned enterprises.

The third was subjecting the budgets of military and intelligence agencies to parliamentary or civilian public oversight. The report’s finding on military and intelligence spending came as part of its broader assessment of the country’s public financial oversight. It said those budgets were not subject to “adequate parliamentary or civilian public oversight”.

FO defends fiscal practices

Foreign Office spokesperson Tahir Andrabi was asked to comment on the report during his weekly press briefing.

“We have seen the US Department of State’s Fiscal Transparency Report 2026 and Pakistan is included among the 67 countries not meeting the minimum criteria,” he said.

He held that Pakistan adhered to “internationally established best practices in respect of fiscal transparency, budgeting process, and financial disclosure”, which he said was a part of Pakistan’s own constitutional and regulatory framework.

Andrabi added that Pakistan was part of an IMF programme, which “by design focused on structural reform and improving fiscal management”.

“Pakistan has successfully completed three IMF reviews, and its reform process and the measures taken under the process have been widely appreciated, including by the credit rating and upgrading by three international rating agencies as well as the Fund,” the spokesperson told reporters and referred them to the Ministry of Finance for further information.

Published in Dawn, August 13th, 2026