Facing pressure on external payments, Pakistan has approached the United States for a $10 billion facility to bolster its foreign exchange reserves, Finance Minister Muhammad Aurangzeb said.
The move comes as Pakistan attempts to reduce its reliance on repeated emergency financial support from friendly nations. The country has struggled with external payment pressures for years and came close to default in 2023 before securing timely assistance from the International Monetary Fund and bilateral partners.
Pakistan is currently implementing a $7 billion IMF programme agreed in 2024, while the government is working to strengthen its credit standing and restore regular access to global capital markets.
The Proposal
Aurangzeb said Pakistan had submitted the request to the US Treasury Department and that discussions were ongoing, although no agreement had been finalised. The proposal is intended to reinforce stability in the foreign exchange market and provide reassurance to international capital markets, rather than function as a conventional loan or credit facility.
“This is not about a credit line or a loan or whatever. This is a signal about our currency stability, a signal about our foreign exchange stability, and that in turn also allows us that we can go to the market,” he said.
Shift in Financing Strategy
The proposed $10 billion Exchange Stabilisation Support Facility from Washington comes as Pakistan attempts to shift away from a financing approach heavily dependent on loans, deposits, and repeated rollovers from friendly countries to cover its external funding requirements.
Aurangzeb said Pakistan’s “complete effort” was now directed towards moving to market-based financing with longer repayment timelines, instead of relying on short-term bilateral rollovers.
“Some will succeed, while with others there might be issues,” he said, adding that the government nevertheless remained committed to reducing its dependence on such financing arrangements.
Improving Credit Rating
The government is also engaging with international credit rating agencies to improve Pakistan’s sovereign rating, which Aurangzeb said had remained unchanged since 2003-04. “We want to move at least towards a B+ rating,” he said.
A stronger sovereign rating could enable Pakistan to access international markets more easily and potentially at lower borrowing costs, while also allowing it to raise debt with longer maturities.
Islamabad is also discussing ways to eventually move away from some of its existing financing arrangements, Aurangzeb said. He added that the government expects to receive feedback from either Exim Bank or the US Treasury by the end of September.
The Bottom Line
Pakistan has approached the United States for a $10 billion exchange stabilisation facility to bolster its foreign exchange reserves and reduce reliance on short-term loans. Finance Minister Muhammad Aurangzeb said the proposal is intended to signal currency stability rather than function as a conventional loan. The country is also working to improve its sovereign credit rating to access international markets at lower borrowing costs.
