US Flags Pakistan's Secretive Military and Intelligence Spending, Calls for Civilian Oversight

Washington, DC: Highlighting significant opacity in Islamabad's defence apparatus, the US State Department has called on Pakistan to bring its military and intelligence budgets under civilian and parliamentary oversight. In its 2026 Fiscal Transparency Report, Washington flagged Pakistan's failure to subject defence spending to public scrutiny, alongside gaps in disclosing state-owned enterprise debt and executive budget timelines.

According to the report, while Pakistan made its enacted budget and end-of-year financial statements widely accessible online, the country's secretive military and intelligence expenditures remained shielded from public and legislative accountability. The State Department noted that military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight, urging Islamabad to institute legislative checks as a core step toward improving fiscal governance.

"It did not publish its executive budget proposal within a reasonable period. The government made only limited information on debt obligations, including major state-owned enterprise debt, publicly available. The military and intelligence budgets were not subject to adequate parliamentary or civilian public oversight," the report highlighted.

Beyond the military apparatus, the assessment raised red flags over Islamabad's handling of public debt data. The State Department observed that Pakistan provided only limited information on debt obligations, specifically pointing to hidden liabilities associated with major state-owned enterprises. 

The report also criticised the Pakistani government for failing to publish its executive budget proposal within a reasonable period, depriving lawmakers and civil society of sufficient time for pre-legislative debate and scrutiny. To address these financial vulnerabilities, Washington urged Pakistan to take three key corrective measures: "Making its executive budget proposal publicly available within a reasonable period; Disclosing detailed information on government debt obligations, including for state-owned enterprises; and
Subjecting the military and intelligence agencies' budgets to parliamentary or civilian public oversight."

Despite flagging high-level opacity in defence and debt, the US report acknowledged positive elements in Pakistan's broader public financial framework. It commended Pakistan's supreme audit institution for meeting international standards of independence, noting that its audit reports were published in a timely manner with substantive findings.

In June, the federal government of Pakistan proposed allocating Rs3 trillion for defence services in fiscal year 2026-27. This marks a 17.65 per cent increase over the previous fiscal year's initial outlay of Rs2.55 trillion, according to Dawn. At Rs3 trillion, the military allocation will account for approximately 2.08 per cent of the country's projected gross domestic product of Rs143.6 trillion and nearly 16 per cent of the total federal outlay of Rs18.77 trillion, pushing military expenditure back above the 2 per cent of GDP threshold after lingering slightly below that mark for several years.

Meanwhile, spending on civil works, which covers the construction of new facilities and the maintenance of military infrastructure, was projected to rise by 7.92 per cent to Rs363.16 billion, up from Rs336.49 billion. Additionally, military pensions were accounted for separately from the main defence services budget; the government had set aside Rs 822 billion for retired military personnel under the federal pensions outlay, Dawn reported.

An amount of Rs10.9 billion had been earmarked for defence administration, compared to an original allocation of Rs7.9 billion in the outgoing fiscal year, which was subsequently revised upward to Rs11.75 billion. Dawn further reported that major military imports and defence acquisitions were typically funded outside this primary head and remain undisclosed. 

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