The loan request follows Pakistan’s wartime diplomacy against Iran and aims to increase reserves and ease pressure on the rupee
Pakistan has requested a $10 billion foreign exchange stabilization facility from the United States, according to a source briefed on the matter, which if approved could provide a lifeline for the cash-strapped South Asian economy.
The request, which is being reported for the first time, follows Pakistan’s role in mediating negotiations over the Iran war, which raised its diplomatic profile and raised hopes that it could seek economic gains from Washington and other partners.
In its request to US Treasury Secretary Scott Bessent, Islamabad is seeking a bilateral foreign exchange stabilization support facility between the US and the Government of Pakistan worth $10 billion with a maturity of up to five years.
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The facility, if accepted, would strengthen Pakistan’s reserves, ease pressure on the rupee and reduce its dependence on multilateral financing, even as Islamabad undertakes tighter fiscal and monetary policies in line with its International Monetary Fund program.
Pakistan remains under IMF discipline to the tune of $7 billion, which has required politically unpopular tax increases, spending curbs and reforms.
Pakistan’s finance ministry did not immediately respond to Reuters’ request for comments outside of office hours in Asia. The U.S. Treasury also did not immediately respond to a request for comment.
Exchange Stabilization Facilities are rare U.S. Treasury support arrangements, typically channeled through the Exchange Stabilization Fund, that provide dollars, swaps, or collateral to support reserves and currency stability.
These facilities are different from the permanent dollar swap lines that the US Federal Reserve has entered into with some major central banks and act as an international supply line of US dollars to support financial stability.
Argentina’s 2025 deal was the first new exchange stabilization facility operation from a foreign government since Uruguay in 2002, outside of Mexico’s long-standing swap line, dating to the 1940s and now valued at $9 billion.
Pakistan narrowly avoided default in 2023 thanks to a $3 billion support deal with the IMF and then secured an expanded $7 billion financing facility, but its reserves still depend on official financing, refinancing and deposits from China and Saudi Arabia.
This exposes Islamabad to changes in bilateral support and disbursement delays from the IMF, and this vulnerability was exposed in April when Pakistan repaid about $3.5 billion, or a fifth of its reserves, to the UAE, while Saudi Arabia provided $3 billion in new support.
Pakistan’s central bank said in January that reserves could return to their 2021 record high, reaching $20 billion by the end of 2026.
Rebuilding ties with Washington
A U.S. exchange rate stabilization mechanism would carry weight as both a safety net and a policy signal, easing pressure on reserves and the Pakistani rupee, while reducing the South Asian country’s dependence on IMF tranches and one-off bailouts.
IMF-backed reforms stabilized the economy at the cost of higher taxes, restrained spending, and limited room for development or social spending.
Global ratings agency Fitch said in April that Pakistan’s membership in the IMF program had supported the country’s financing capacity, while replenished foreign exchange reserves provided protection against economic shocks linked to the Middle East conflict.
But deeper constraints remain. Fitch warned that rising energy costs and potential supply disruptions could sharply erode the country’s foreign exchange reserves.
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Foreign investment in Pakistan has remained weak, deterred by recurring external crises, political uncertainty, security risks, past restrictions on profit repatriation and a narrow export base, while the country’s credit rating remains deep in speculative territory, keeping borrowing costs high and market access limited.
Pakistan has sought to use its ties with the Trump administration to address some of these issues, with economic cooperation so far spanning crypto, real estate and mining.
Pakistan signed a stablecoin deal for cross-border payments with a subsidiary of World Liberty Financial, the main crypto business of President Donald Trump’s family, entered into a memorandum of understanding to redevelop the shuttered PIA-owned Roosevelt Hotel in New York with the U.S. government, and courted U.S. mining investments, including at Reko Diq, where the U.S. Export-Import Bank announced $1.2 billion in financing.
