Pakistan asks U.S. for $10bn currency backstop

July 22, 2026 (MLN): Pakistan has requested a $10 billion exchange stabilization facility from the United States in a move aimed at strengthening its foreign exchange reserves, easing pressure on the rupee and reducing reliance on multilateral lenders, Reuters reported, citing a source familiar with the matter.

According to the report, Islamabad has sought a Bilateral Exchange Stabilization Support Facility worth $10 billion with a maturity of up to five years in a request submitted to U.S. Treasury Secretary Scott Bessent. If approved, the arrangement would provide a rare U.S. Treasury backstop to help stabilize Pakistan's external position.

The request comes after Pakistan's diplomatic engagement during the Iran conflict, which reportedly elevated its profile in Washington and fueled expectations that Islamabad could leverage improved ties to secure economic support from the United States and other partners.

Reuters reported that the proposed facility would help bolster Pakistan's foreign exchange reserves, reduce pressure on the local currency and lessen dependence on financing from multilateral institutions, while the country continues implementing fiscal and monetary reforms under its $7 billion International Monetary Fund (IMF) Extended Fund Facility.

Pakistan has remained under the IMF programme, which has required higher taxes, spending restraint and structural reforms.

The country's Finance Ministry did not immediately respond to Reuters' request for comment, while the U.S. Treasury also did not immediately comment on the reported proposal.

Exchange stabilization facilities are uncommon U.S. Treasury instruments, typically supported through the Exchange Stabilization Fund (ESF), and are designed to provide dollar liquidity, currency swaps or guarantees to help countries stabilize reserves and currencies. Reuters noted that these facilities differ from the U.S. Federal Reserve's standing dollar swap lines with major central banks.

The report highlighted that Pakistan narrowly avoided a sovereign default in 2023 after securing a $3 billion IMF Stand-By Arrangement, before later obtaining the current $7 billion Extended Fund Facility.

Despite recent improvements, the country's external financing continues to rely heavily on official inflows, debt rollovers and deposits from friendly countries, including China and Saudi Arabia.

Reuters said Pakistan's external vulnerability was underscored earlier this year when it repaid approximately $3.5 billion to the United Arab Emirates—equivalent to nearly one-fifth of its foreign exchange reserves—while Saudi Arabia extended $3 billion in fresh financial support.

The State Bank of Pakistan has previously projected that foreign exchange reserves could reach nearly $20 billion by the end of 2026.

The news agency further reported that a U.S.-backed stabilization facility would not only provide liquidity support but also send a strong political signal, potentially improving investor confidence and reducing Pakistan's dependence on periodic IMF disbursements and bilateral rescue packages.

Reuters also noted that while Fitch Ratings said in April that Pakistan's adherence to the IMF programme had strengthened its funding capacity and rebuilt foreign exchange buffers, the agency warned that higher energy costs and potential supply disruptions could still erode reserves.

It added that foreign investment into Pakistan remains constrained by policy uncertainty, security concerns, a narrow export base and the country's speculative-grade credit rating.

The report said Pakistan has recently sought to deepen economic ties with the United States through initiatives in crypto, real estate and mining, including cooperation linked to the Roosevelt Hotel redevelopment, investment opportunities in Reko Diq, and financing support announced by the U.S. Export-Import Bank.

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