Pakistan has formally requested a $10 billion currency stabilization facility from the United States, as reported by two informed sources on Wednesday. This measure, if approved, could provide crucial support for South Asia’s economy, which is currently grappling with a liquidity crisis.
This request follows Pakistan’s significant role in mediating negotiations regarding the Iran conflict, enhancing its diplomatic visibility and raising hopes for economic benefits from Washington and other partners.
The Pakistani Finance Minister, Muhammad Aurangzeb, submitted the request in a letter during a meeting with US Treasury Secretary Scott Bessent on Tuesday, as outlined by an American official.
The document proposes a bilateral support mechanism aimed at stabilizing the exchange rate between the US and the Pakistani government, with a potential maturity of up to five years.
If granted, this mechanism would strengthen Pakistan’s reserves, alleviate pressure on the rupee, and reduce the country’s dependence on multilateral funding, all while Islamabad implements stricter fiscal and monetary policies in line with an International Monetary Fund (IMF) program.
The US Treasury declined to comment on the request, and the Pakistan Ministry of Finance did not respond immediately to Reuters’ request for a statement.
During the meeting with Bessent, Aurangzeb discussed Pakistan’s economic vulnerability to regional geopolitical developments, although his ministry did not mention the request.
According to a ministry statement, “Senator Aurangzeb sought greater US support for Pakistan’s integration into international markets, backed by improved access to international capital markets, larger foreign reserves, and upgraded sovereign credit ratings.” Both parties reaffirmed their commitment to deepening bilateral economic cooperation, promoting increased investments from the US, and advancing strategic projects.
Pakistan is currently under a $7 billion financial discipline program from the IMF, which has imposed unpopular tax increases, spending restrictions, and reforms.
Currency stabilization facilities are rare forms of support from the US Treasury, typically funneled through the Currency Stabilization Fund, which provides dollars, swaps, or guarantees to bolster reserves and maintain currency stability.
These facilities differ from the permanent dollar swap lines that the US Federal Reserve maintains with key central banks, acting as an international supply line of US dollars to support financial stability.
A package granted to Argentina in 2025 marked the first new operation of a currency stabilization mechanism for a foreign government since that for Uruguay in 2002, apart from Mexico’s long-standing swap line dating back to the 1940s, currently valued at $9 billion.
In 2023, Pakistan narrowly avoided defaulting on its debts thanks to a $3 billion emergency credit agreement with the IMF and subsequently secured an Extended Fund Facility (EFF) of $7 billion, along with a separate $1.3 billion loan aimed at enhancing its resilience to climate change and natural disasters. However, its reserves continue to rely heavily on official financing, refinancing, and deposits from China and Saudi Arabia.
This dependency leaves Islamabad exposed to fluctuations in bilateral support and delays in payments from the IMF. This vulnerability became evident in April when Pakistan repaid approximately $3.5 billion, a fifth of its reserves, to the United Arab Emirates, with Saudi Arabia providing an additional $3 billion in support.
The State Bank of Pakistan stated in January that reserves could potentially return to levels close to the record of 2021, reaching $20 billion by the end of 2026.
Redefining Relations with Washington
A currency stabilization facility from the US would significantly serve as both a liquidity support mechanism and a political signal, easing pressure on reserves and the Pakistani rupee, while also reducing the country’s dependence on IMF tranches and ad-hoc bailout measures.
The IMF-supported reforms have stabilized the economy at a political cost, namely higher taxes, spending restrictions, and limited room for development or social spending.
In April, Fitch Ratings indicated that Pakistan’s compliance with the IMF program has sustained the country’s financing capacity, while rebuilt foreign reserves provide protection against economic shocks stemming from the Middle East conflict.
However, deeper constraints remain. Fitch warned that rising energy costs and potential supply disruptions could drastically erode the country’s foreign reserves.
Foreign investment in Pakistan has remained low, deterred by recurring external crises, political uncertainty, security risks, prior restrictions on profit repatriation, and a limited export base, while the country’s credit rating remains at a deeply speculative level, which sustains high borrowing costs and limits market access.
Pakistan has attempted to leverage its ties with the Trump administration to address some of these issues through economic cooperation, which has so far included cryptocurrencies, real estate, and mining sectors.
Pakistan signed an agreement for stablecoin payments for cross-border transactions with a subsidiary of World Liberty Financial, the leading cryptocurrency business of President Donald Trump’s family.
Additionally, Islamabad has entered into a memorandum of understanding with the US government for the renovation of the Roosevelt Hotel in New York, owned by Pakistan International Airlines and currently closed, while attracting US mining investments, including in Reko Diq, where the US Export-Import Bank announced $1.25 billion in financing.
