Bankrupt Pakistan begs for support, seeks $10 billion in US backstop facility to boost reserves

[00:00:08]Pakistan has asked the United States for a $10 billion exchange stabilization facility.

[00:00:14]Reuters reported citing a source, which if approved could provide a lifeline for the cash-strapped South Asian economy.

[00:00:23]According to Reuters, 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 [music] hopes that it could seek economic gains from Washington and other partners.

[00:00:40]In the request to US Treasury Secretary Scott Bessent, Islamabad is seeking a bilateral exchange stabilization support facility between the US and the Pakistani government worth $10 billion with maturity of up to five years, Reuters reported. The facility, if agreed to, would bolster Pakistan's [music] reserves, ease pressure on the rupee, and reduce its reliance on multilateral financing, [music] even as Islamabad undertakes tighter fiscal and monetary policies in line with its International Monetary Fund program.

[00:01:12]>> [music] >> Pakistan remains under $7 billion IMF discipline that has required politically unpopular tax increases, spending restraint, and reforms, >> [music] >> Reuters said.

[00:01:25]Pakistan narrowly avoided default in 2023 with a $3 [music] 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.

[00:01:49]According to Reuters, Islamabad was exposed to shifts in bilateral support and IMF disbursement delays. That vulnerability was exposed in April when Pakistan repaid about 3.5 billion dollars, 1/5 of its reserves to the United Arab Emirates with Saudi Arabia providing 3 billion dollars in fresh support.

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