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The United States of America has recommended that Pakistan place its defence and intelligence budgets under parliamentary or civilian oversight, saying this would improve fiscal accountability and transparency.

The suggestion was part of the US State Department’s 2025 Fiscal Transparency Report released on Friday. The annual review evaluates budget practices in 140 governments, examining how countries publish, audit, and disclose information about public spending.

In its section on Pakistan, the report noted that military and intelligence budgets were not subject to sufficient civilian or parliamentary review. It said Islamabad could improve fiscal openness by allowing such scrutiny and by publishing its executive budget proposal in a timely manner. According to the assessment, the government did not release the proposal within a reasonable period, limiting informed debate and parliamentary discussion.

The report also raised concerns about debt disclosure. It found that the government provided only limited information on its debt obligations, including those of major state-owned enterprises. It recommended making detailed data on public and state-owned enterprise debt available to the public.

At the same time, the State Department highlighted positive practices. It observed that Pakistan’s enacted budget and end-of-year reports were publicly accessible, including online, and were generally reliable. These documents were also subject to audit by the supreme audit institution, which the report said met international standards of independence. Audit findings were described as being released within a reasonable timeframe.

The review further noted that Pakistan had specified, in law and regulation, the criteria and procedures for awarding natural resource extraction contracts and licences, and that basic information on these awards was publicly available.

This year’s assessment repeated concerns from earlier reports, particularly on the lack of oversight of defence spending and gaps in debt transparency.

The release of the report coincides with Pakistan’s ongoing budgetary pressures. The government presented a Rs17.57 trillion budget for the fiscal year 2025-26. Of this, Rs9.7 trillion has been allocated for debt servicing, while Rs2.55 trillion is set aside for defence, an increase of nearly 20 percent compared to the previous year.

The Fiscal Transparency Report is intended as a global benchmark for financial disclosure and accountability. It evaluates whether governments publish executive budgets on time, disclose debt obligations, ensure the independence of audit institutions, and subject sensitive expenditures such as defence and intelligence to oversight

A South Asia security researcher at the University of Technology Sydney, Muhammad Faisal, has said that the Strategic Mutual Defence Agreement (SMDA) between Pakistan and the Kingdom of Saudi Arabia (KSA) could serve as a template for Islamabad to engage in similar bilateral defence cooperation pacts with the United Arab Emirates (UAE) and Qatar.

“In the immediate term, this agreement will consolidate and formalise multi-prong defence cooperation already underway, and new avenues to expand it via joint trainings, defence production and potential expansion of Pakistani troops contingent in Saudi Arabia will be explored,” Al Jazeera quoted Faisal as saying.

“These events [Israeli strikes in Iran and Doha] have exacerbated security anxieties of the Gulf states while jeopardising confidence in the US security umbrella as the ultimate shield. As Gulf states look to bolster their security, regional countries such as Pakistan, Egypt and Turkiye emerge as natural partners,” he added.

The statement came as Pakistani Defence Minister Khawaja Asif said “the door had not been closed” and there was a possibility of other countries joining the Pakistan-Saudi Arabia security pact.

“It is too early to speak of other countries joining the agreement; the door has not been closed,” the defence czar said.

Asif was appearing on a private media outlet a day after the Prime Minister’s Office (PMO) late Wednesday night announced the signing of the agreement, stating that “any aggression against either country shall be considered an act of aggression against both”.

“This agreement, which reflects the shared commitment of both nations to enhance their security and to achieve security and peace in the region and the world, aims to develop aspects of defence cooperation between the two countries and strengthen joint deterrence against any aggression,” read a statement issued by the PMO.

It may be noted that the agreement was signed after Israel’s illegal strikes on Qatar, bordering Saudi Arabia, on September 9, mounting security concerns and a lack of trust in the US’ ability to keep Israel on a leash by Gulf countries.