By Staff Reporter
ISLAMABAD: Pakistan needs to open its military and intelligence budgets to civilian scrutiny and disclose more about its state debt, the US State Department said, placing the South Asian nation among dozens of governments that fell short of Washington’s fiscal transparency benchmarks even as it eyes fresh support from the International Monetary Fund.
The department’s 2026 Fiscal Transparency Report, an annual assessment mandated by Congress, found that Pakistan’s roughly Rs3 trillion defence budget escapes the kind of parliamentary or public oversight applied to the rest of government spending. The report also flagged delays in releasing the executive budget proposal and gaps in disclosure around debt held by state-owned enterprises.
Pakistan was one of 67 governments — out of 139 economies and the Palestinian Authority reviewed — that failed to meet the department’s minimum standards this year, according to the report, released Tuesday in Washington. Seventy-three governments cleared the bar. Of the 67 that didn’t, 14 were credited with making significant progress, a distinction the State Department did not extend to Pakistan.
“The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight,” the report said, one of three specific shortfalls the department identified in Pakistan’s public financial management.
The other two centred on timing and disclosure. Pakistan’s government did not make its executive budget proposal public within a reasonable period ahead of approval, the report found, limiting the ability of lawmakers and citizens to weigh in before spending plans were finalised. Separately, it said authorities disclosed only limited information about government debt obligations, including liabilities tied to major state-owned enterprises — a gap that obscures the full scope of contingent risk facing the sovereign balance sheet.
The findings arrive weeks after Pakistan’s National Assembly passed an Rs18.8 trillion Finance Bill for the 2026-27 fiscal year in June, with the defence allocation of Rs3 trillion — including at least Rs335 billion in provincial contributions — pushing military spending back above 2% of gross domestic product after several years of running just under that threshold.
Not every part of the assessment was critical. The report said Pakistan made its enacted budget and end-of-year financial statements widely available online during the review period, and that publicly available budget documents offered what it called a substantially complete picture of most government revenue and expenditure, including from natural resources. It also found the country’s supreme audit institution meets international standards of independence, publishes findings within a reasonable timeframe, and produces substantive results — a marker of institutional credibility that sets Pakistan apart from some of its regional peers.
The State Department likewise credited Pakistan with maintaining legal criteria for awarding natural resource extraction licenses and largely following them in practice, publishing basic data on those awards, operating a sovereign wealth fund with a sound legal framework, and making public procurement information accessible.
To close the remaining gaps, the department recommended three steps: publish the executive budget proposal within a reasonable period; disclose detailed data on government debt, including obligations of state-owned enterprises; and bring military and intelligence budgets under parliamentary or civilian oversight.
Pakistan’s Foreign Office pushed back on the findings a day later. Spokesperson Tahir Andrabi, addressing the report at his weekly briefing in Islamabad on Wednesday, said the country adheres to “internationally established best practices in respect of fiscal transparency, budgeting process, and financial disclosure,” which he described as embedded in Pakistan’s own constitutional and regulatory framework.
Andrabi pointed to Pakistan’s current IMF program, which he said is designed around structural reform and improved fiscal management, noting the country has completed three reviews under that arrangement. He said the reform measures taken as part of the program have drawn recognition, including credit-rating upgrades from three international rating agencies as well as from the Fund itself, and referred further questions to the Ministry of Finance.
The scrutiny of Islamabad’s fiscal disclosure comes as Pakistan continues to lean on IMF support to stabilise an economy that has cycled through repeated balance-of-payments strain over the past several years, making the credibility of its public finance data a recurring point of interest for creditors, rating agencies and multilateral lenders alike. Fiscal transparency, the State Department said in releasing the broader report, helps build market confidence and underpins the kind of accountability that gives citizens — and investors — a clearer window into how public money is raised and spent.
Copyright © 2021 Independent Pakistan | All rights reserved
