Islamabad – The United States State Department’s Fiscal Transparency Report 2025 has recognized improvements in Pakistan’s governance and fiscal disclosure practices, while also calling for greater oversight of defence and intelligence budgets.
Progress in Budget Transparency
The report praised Pakistan for ensuring public access to its enacted budget and end-of-year financial statements, both of which are subject to timely audit by the country’s supreme audit institution. 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.”
The audit body was highlighted as meeting international standards of independence, with findings published in a manner considered reliable and credible. The report 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 follows legal procedures in awarding natural resource contracts and provides basic information on such awards, contributing to public visibility on state-managed resources. It noted 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.”
Officials in Islamabad underline that these steps reflect Pakistan’s resolve to strengthen accountability, expand access to information and align with global standards of fiscal governance.
Concerns Over Defence Spending and Debt Data
Despite these improvements, Washington underscored that Pakistan’s military and intelligence expenditures remain largely outside the scope of legislative scrutiny. “The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight,” the report stated. 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.”
Debt disclosure was also flagged as a gap. 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.”
It also called for earlier publication of key fiscal documents. “The government… did not publish its executive budget proposal within a reasonable period,” the assessment noted, calling for timely release to enable informed debate and scrutiny.
Pakistani policymakers argue that while sensitive security allocations are less open to parliamentary debate, overall fiscal discipline has delivered results, including the lowest fiscal deficit in nearly two decades and a sharp decline in inflation, reflecting disciplined policy choices.
Mounting Fiscal Pressures
The recommendations come against the backdrop of Pakistan’s expanding federal budget, which for 2025–26 totals Rs17.57 trillion. Of this, Rs9.7 trillion is allocated to debt servicing and Rs2.55 trillion to defence, reflecting a nearly 20 percent increase in defence spending compared to the previous year.
According to the State Department, introducing greater fiscal transparency in such sensitive areas would be critical for improving governance, bolstering investor confidence, and ensuring informed public debate.
Islamabad counters that sustained revenue growth, rising remittances, and equitable taxation reforms demonstrate the institutional strength of the economy and the trust of overseas Pakistanis in the country’s stability.
International Recognition and Reform Challenges
While the US report reiterated longstanding concerns about the absence of legislative oversight of defence budgets, it also acknowledged Pakistan’s progress in areas such as publishing executive budgets, following legal procedures in resource contracts, and ensuring reliable auditing standards. This balance of recognition and recommendation reflects both the progress Islamabad has made and the reforms that remain necessary.
Officials stress that the responsible use of development funds, stronger oversight mechanisms, and a focus on long-term resilience highlight Pakistan’s reform trajectory, one increasingly recognised by international institutions.
Analysts note that the findings underscore Pakistan’s challenge of reconciling the demands of fiscal stability with the sensitivities of national security. For policymakers, the test will be how far transparency can extend in areas historically shielded from public debate.
![Once the largest US hub in Afghanistan, Bagram, less than 800km from China’s Xinjiang border, is now at the center of tensions as Kabul rejects Trump’s demand. [Courtesy: AP].](https://htnworld.com/wp-content/uploads/2025/09/7e3b52e7-db09-431e-b88e-96ffbca4b96e_e5eb8fbf.webp)
![Once the largest US hub in Afghanistan, Bagram, less than 800km from China’s Xinjiang border, is now at the center of tensions as Kabul rejects Trump’s demand. [Courtesy: AP].](https://htnworld.com/wp-content/uploads/2025/09/7e3b52e7-db09-431e-b88e-96ffbca4b96e_e5eb8fbf-1024x683.webp)
