Pakistan-US Economic Reset? Islamabad Seeks Rare $10bn Facility | Reuters | Dawn News English

[00:00:00]Pakistan has asked the United States for a rare $10 billion facility to strengthen its foreign exchange reserves and ease pressure on the rupee, Reuters reported, citing a source briefed on the matter. The previously unreported request follows Pakistan's role in brokering talks over the Iran war, which raised Islamabad's diplomatic profile and expectations that it could secure economic support from Washington.

[00:00:20]According to Reuters, Pakistan has proposed a bilateral exchange stabilization support facility. Pakistan has proposed a bilateral exchange stabilization support facility to US Treasury Secretary Scott [music] Pessent. The facility would be worth $10 billion and have a maturity of up to 5 years.

[00:00:35]Neither government has publicly confirmed the request. The US Treasury declined to comment, while Pakistan Finance Ministry did not immediately respond to Reuters. If approved, the facility could provide Pakistan with access to dollars, currency swaps, or guarantees. This could bolster its reserves, stabilize [music] the rupee, and reduce its reliance on IMF disbursements and emergency support from friendly countries. But such US Treasury facilities are extremely rare. They are generally backed by Washington's Exchange Stabilization Fund, and are different from the permanent dollar swap lines maintained by the US Federal Reserve with a select group of major central banks. Before the United States extended a facility to Argentina in 2025, the last new operation involving a foreign government was with Uruguay in 2002. Mexico separately has a long-standing swap line currently worth $9 billion. Pakistan's $10 billion request is therefore significant as both a potential financial lifeline and a political signal of closer ties with Washington. Pakistan narrowly avoided a default in 2023 >> [music] >> after securing a $3 billion IMF standby agreement. It later entered a $7 billion extended fund [music] facility and obtained a separate $1.3 billion climate resilience loan. Despite [music] this support, Pakistan's reserves continue to rely heavily on IMF disbursements, loan rollovers, and deposits from countries including China and Saudi Arabia. The vulnerability became clear in April when Pakistan repaid about $3.5 billion, equivalent to about 1/5 [music] of its reserves, to the United Arab Emirates.

[00:01:57]Saudi Arabia subsequently provided them $3 in fresh support. The State Bank of Pakistan expects foreign exchange reserves to reach $20 by the end of 2026, approaching their 2021 record. A US facility could provide Pakistan with protection against external shocks, including rising energy prices and supply [music] disruptions caused by the Middle East conflict. However, the country's deeper economic constraints remain. Foreign [music] investment continues to be limited by policy uncertainty, security concerns, previous restrictions [music] on profit reparations, and a narrow export base.

[00:02:26]Pakistan's speculative grade credit rating also keeps borrowing costs high and access to international markets limited. Islamabad has recently pursued closer economic engagement with the Trump administration across cryptocurrency, real estate, and mining.

[00:02:38]These initiatives include a stable coin agreement with an affiliate of the Trump family's World Liberty Financial, proposed cooperation over a PIA-owned Roosevelt Hotel in New York, and a $1.2 billion in announced US [music] Export-Import Bank financing for the record Reko Diq mining project. It remains unclear whether Washington will accept Islamabad's request. If approved, however, a $10 facility could become one of the most significant US financial commitments to Pakistan in decades and mark a major shift in the two [music] countries' economic relationship.