Pakistan requests $10 billion exchange stabilization facility from U.S.

Pakistan has asked the United States for a $10 billion exchange stabilization facility, according to a source briefed on the matter, which, if approved, could provide a lifeline for the cash-strapped South Asian economy.

The request, which is being reported for the first time, follows Pakistan's role in brokering talks over the Iran war, which raised its diplomatic profile and stirred hopes that it could seek economic gains from Washington and other partners.

In the request to U.S. Treasury Secretary Scott Bessent, Islamabad is seeking a Bilateral Exchange Stabilization Support Facility between the U.S. and the Pakistani government worth $10 billion with maturity of up to five years.

The facility, if agreed to, would bolster Pakistan's reserves, ease pressure on the rupee and reduce its reliance on multilateral financing, even as Islamabad undertakes tighter fiscal and monetary policies in line with its International Monetary Fund program.

The U.S. Treasury declined to comment on the reported request.

Pakistan's finance ministry did not immediately respond to Reuters' request for comment outside of Asia business hours

Pakistani Finance Minister Muhammad Aurangzeb met with Bessent in Washington on Tuesday and said he had raised the vulnerability of the country's economy to regional geopolitical developments, the ministry said in a statement that did not mention the request.

"Senator Aurangzeb sought greater U.S. support for Pakistan's road to market, underpinned by improved access to international capital markets, higher foreign exchange reserves, and enhanced sovereign credit ratings," it said, adding that both sides reaffirmed their commitment to deepening bilateral economic cooperation, promoting greater U.S. investment, and advancing strategic projects.

Pakistan remains under $7 billion IMF discipline that has required politically unpopular tax increases, spending restraint and reforms.

Exchange stabilization facilities are rare U.S. Treasury backstops, usually routed via the Exchange Stabilization Fund, that provide dollars, swaps or guarantees to support reserves and steady currencies.

These facilities are different from the permanent standing dollar swap lines that the U.S. Federal Reserve has with some major central banks and act as an international supply line of U.S. dollars to underpin financial stability.

A 2025 Argentina package was the first new foreign-government exchange stabilization facility operation since Uruguay in 2002, aside from Mexico's long-standing swap line, dating to the 1940s and now sized at $9 billion.

Pakistan narrowly avoided default in 2023 with a $3 billion IMF standby deal and later secured a $7 billion Extended Fund Facility, along with a separate $1.3 billion loan to build up its resilience to climate change and natural disasters. But its reserves still depend on official financing, rollovers and deposits from China and Saudi Arabia.

That leaves Islamabad exposed to shifts in bilateral support and IMF disbursement delays. That vulnerability was exposed in April when Pakistan repaid about $3.5 billion, one-fifth of its reserves, to the United Arab Emirates with Saudi Arabia providing $3 billion in fresh support.

Pakistan's central bank said in January that reserves could return to near their 2021 record, reaching $20 billion by the end of 2026.

RECASTING TIES WITH WASHINGTON

A U.S. exchange stabilization facility would carry weight as both a liquidity backstop and political signal, easing pressure on reserves and the Pakistani rupee, while reducing the South Asian country's dependence on IMF tranches and ad hoc rescues.

IMF-backed reforms have stabilized the economy at a political cost, including higher taxes, spending restraint and limited room for development or welfare spending.

Ratings agency Fitch said in April that Pakistan's adherence to its IMF program has supported the country's funding capacity, while rebuilt foreign exchange buffers provide a cushion against economic shocks from the Middle East conflict.

But deeper constraints remain. Fitch cautioned that rising energy costs and potential supply disruptions could sharply erode the country's foreign exchange reserves.

Foreign investment in Pakistan has remained thin, deterred by recurring external crises, policy uncertainty, security risks, past profit-repatriation curbs and a narrow export base, while the country's credit rating remains deep in speculative-grade territory, keeping borrowing costs high and market access limited.

Pakistan has sought to use its ties to the Trump administration to address some of these issues, with economic cooperation that has so far spanned crypto, real estate and mining.

Pakistan has signed a stablecoin agreement for cross-border payments with an affiliate of World Liberty Financial, the main crypto business of President Donald Trump's family. It has also pursued a memorandum of understanding to redevelop the closed Pakistan International Airlines-owned Roosevelt Hotel in New York with the U.S. government, and courted U.S. mining investment, including in Reko Diq, where the U.S. Export-Import Bank has announced $1.25 billion in financing.