State Department report calls for greater civilian oversight of Pakistan’s finances

The US State Department said Wednesday that Pakistan needs to strengthen civilian oversight of public finances to improve fiscal transparency, releasing findings that highlighted persistent gaps in how the country discloses key financial information.

The department’s assessment described fiscal transparency as a core component of effective public financial management, noting that it allows citizens to understand how government revenues and tax dollars are spent. That visibility into budgets, the report said, gives citizens the tools they need to hold their governments accountable.

The findings arrive weeks after Pakistan’s National Assembly passed an 18.8 trillion rupee Finance Bill for 2026 to 2027 in June, which included a defence budget of 3 trillion rupees, with at least 335 billion rupees coming from provincial contributions.

In its 2026 Fiscal Transparency Report on Pakistan, the State Department said the country continues to fall short in disclosing important financial data, particularly around debt obligations and the budgets of military and intelligence agencies. The report found that Pakistan’s government did not publish its executive budget proposal within a reasonable timeframe and made only limited information available on debt obligations, including debt held by major state owned enterprises. It further noted that military and intelligence budgets remain outside the scope of adequate parliamentary or civilian oversight.

The assessment also pointed to areas of progress. During the review period, the report said, Pakistan’s government made its enacted budget and end of year financial reports widely and easily accessible to the public, including through online platforms. It found that publicly available budget documents offered a substantially complete picture of most planned government expenditures and revenues, including revenue generated from natural resources.

The report described the information contained in the budget as generally reliable and subject to audit by the country’s supreme audit institution, which it said meets international standards of independence. Audit reports, the department noted, are published within a reasonable period and contain substantive findings. It also found that the government has specified, and largely followed in practice, clear legal criteria and procedures for awarding natural resource extraction contracts and licenses, while making basic information about such awards publicly available. The report added that Pakistan’s sovereign wealth fund operates under a sound legal framework and that the government publishes accessible information on public procurement contracts.

Among its recommendations, the State Department urged Pakistan to make its executive budget proposal available to the public within a reasonable timeframe, disclose more detailed information on government debt, including debt tied to state owned enterprises, and bring military and intelligence agency budgets under parliamentary or civilian oversight.

Responding to questions about the report during a weekly press briefing, Foreign Office spokesperson Tahir Andrabi acknowledged that the report had been released the previous day. He said Pakistan adheres to internationally recognized best practices around fiscal transparency, budgeting and financial disclosure, while also operating within its own constitutional, legislative and regulatory frameworks.

Andrabi noted that Pakistan remains engaged in an ongoing International Monetary Fund program centered on structural reform and improved fiscal management. He said the country has completed three IMF reviews so far, adding that the reform measures taken under the program have drawn broad recognition, including credit rating upgrades from three international rating agencies as well as positive assessments from the IMF itself.