Pakistan seeks $10 billion US exchange stabilization facility to bolster foreign reserves

Pakistan has formally requested a $10 billion exchange stabilization facility from the United States, seeking to strengthen its foreign exchange reserves and alleviate economic pressure. The request was conveyed by Pakistani Finance Minister Muhammad Aurangzeb to US Treasury Secretary Scott Bessent during a meeting in Washington.

If approved, the facility would provide crucial support to Pakistan's foreign exchange reserves, helping to stabilize the Pakistani rupee. This would also reduce the country's dependence on multilateral financing as it continues to implement fiscal and monetary reforms under its International Monetary Fund (IMF) program.

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Finance Minister Senator Muhammad Aurangzeb briefed the US Treasury Secretary on Pakistan's journey toward macroeconomic stability, sustainable, and export-led growth. The Finance Minister also highlighted the negative impacts of the regional situation on the Pakistani economy.

In his briefing, Aurangzeb highlighted the vulnerability of Pakistan's economy to regional geopolitical developments. He sought greater U.S. support for improving market access, increasing foreign exchange reserves, and enhancing the country's sovereign credit ratings. Both sides reaffirmed their commitment to strengthening bilateral economic cooperation and encouraging greater U.S. investment.

Pakistan is currently operating under a $7 billion IMF program that necessitates politically sensitive fiscal reforms. The country narrowly avoided a sovereign default in 2023 and has since secured an Extended Fund Facility. Exchange stabilization facilities are uncommon financial arrangements provided by the U.S. Treasury to support a country's foreign exchange reserves and currency stability.

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Desire for US cooperation regarding improved access to international capital markets, enhancement in foreign exchange reserves, and increased market access based on sovereign credit ratings.