Pakistan seeks $10 billion US exchange stabilization facility

Pakistan has requested a USD 10 billion exchange stabilization facility from the United States to strengthen its foreign exchange reserves, support the rupee and reduce reliance on multilateral lenders, according to a Reuters report citing a source briefed on the matter.

Reuters reported that Islamabad asked U.S. Treasury Secretary Scott Bessent to establish a bilateral Exchange Stabilization Support Facility worth USD 10 billion with a maturity of up to five years. The request has not been previously reported.

According to Reuters, the request follows Pakistan's diplomatic engagement during efforts to broker talks over the Iran conflict, which officials believe has enhanced the country's international standing and could help secure greater economic support from Washington.

If approved, the facility would bolster Pakistan's foreign exchange reserves, ease pressure on the rupee and reduce dependence on multilateral financing as the country continues implementing fiscal and monetary reforms under its USD 7 billion International Monetary Fund (IMF) program, Reuters reported.

The U.S. Treasury declined to comment on the reported request, Reuters said. Pakistan's Ministry of Finance also did not immediately respond to Reuters' request for comment outside Asian business hours.

The report comes after Finance Minister Senator Muhammad Aurangzeb met U.S. Treasury Secretary Scott Bessent in Washington on Tuesday.

According to Pakistan's Finance Ministry, Aurangzeb highlighted the vulnerability of Pakistan's economy to regional geopolitical developments and sought greater U.S. support for the country's efforts to achieve stronger market access, build foreign exchange reserves, improve its sovereign credit rating and expand access to international capital markets.

The ministry said both sides reaffirmed their commitment to strengthening bilateral economic cooperation, encouraging greater U.S. investment and advancing strategic projects. The official statement did not mention any request for an exchange stabilization facility.

Pakistan is currently implementing a USD 7 billion IMF-supported economic reform program that requires higher tax collection, fiscal restraint and structural reforms to stabilize the economy.

Reuters noted that exchange stabilization facilities are uncommon financial backstops typically provided through the U.S. Treasury's Exchange Stabilization Fund. They may provide dollar funding, currency swaps or guarantees to help countries strengthen foreign exchange reserves and stabilize their currencies.

Unlike the U.S. Federal Reserve's permanent dollar swap lines with select major central banks, these facilities are targeted mechanisms designed to help countries manage external financial pressures, Reuters reported.