A recent US State Department fiscal transparency report has formally requested that Pakistan subject its military and intelligence budgets to civilian and parliamentary oversight. The report explicitly cites deep opacity within Pakistan’s defense sector, stating that these budgets “were not subject to adequate parliamentary or civilian public oversight.”
The report identifies three structural failures:
👉Defense and intelligence spending entirely bypasses parliamentary review.
👉There is extreme opacity regarding government debt obligations, particularly hidden liabilities tied to state-owned enterprises.
👉The failure to publish the budget on time prevents pre-legislative debate by civil society.
👉The timing of this US request is significant. In June, Pakistan proposed a historic 17.65% increase in its defense budget, raising military spending to over 3 trillion Pakistani rupees (approximately $10 billion). This places military spending above 2% of the country’s projected GDP—a substantial commitment for an economy in systemic crisis.
Pakistan justifies this surge by citing regional security concerns and the fallout from India’s Operation Sindhur. However, billions of dollars in military imports and acquisitions remain hidden from public view. Additionally, Pakistan’s recent signing of the Mecca Joint Defense Agreement with Saudi Arabia and Turkey signals expanding defense alignments in the Gulf.
This public critique from the US is a rare and jarring development in bilateral ties, especially given the historically close relationship between the Trump administration and Pakistan’s military leadership. By making this critique public, the US appears to be leveraging financial transparency standards to pressure Pakistan’s generals while maintaining direct military-to-military engagement.
The $10 billion figure is particularly striking. Pakistan is simultaneously seeking a $10 billion financial lifeline from the U.S., a Bilateral Exchange Stabilization Support Facility, to shore up foreign reserves and stabilize its currency. This has led to the perception that Pakistan is effectively asking American taxpayers to finance its military expansion. The US has not yet approved this request, and the State Department’s focus on military transparency suggests that US funds will not be granted to a government that conceals its defense spending.
Pakistan’s economic reality underscores the tension: the country is reliant on a fragile $7 billion IMF program, burdened by soaring public debt, catastrophic energy costs, and inflation that has decimated the middle class. The 17.65% increase in military spending is being funded through a brutal trade-off, civilian expenditures on public health, education, and climate resilience are being cannibalized to protect the defense budget, while the poorest citizens face higher taxes on basic goods.
This dynamic places Prime Minister Shahbaz Sharif’s civilian government in a difficult position. Pushing for the parliamentary oversight demanded by the US risks a clash with a military establishment that historically holds the real levers of power. Domestic protests by government employees over inflation and stagnant wages further highlight the political cost of this imbalance.
The US report recommends that Pakistan:
👉Publish its proposed budget on time,
👉Disclose detailed information on government debt obligations, including for state-owned enterprises, and
Subject military and intelligence budgets to parliamentary or civilian public oversight.
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The core critique inherent in this situation is that Pakistan is undertaking a massive expansion of military spending without any meaningful debate or scrutiny in public interest forums such as Parliament. This lack of transparency and accountability raises fundamental questions about fiscal governance, national priorities, and the equitable distribution of economic burdens in a country already facing severe financial distress.
