Pakistan Seeks $10 Billion Currency Support Facility From US After Iran War Mediation Role

Pakistan has sought a $10 billion currency support facility from the United States that could help strengthen its foreign exchange reserves and provide relief to its financially strained economy, Reuters reported, citing a source familiar with the matter.

The request comes after Pakistan’s role in facilitating talks related to the Iran war boosted its diplomatic standing and raised expectations in Islamabad that it could seek economic benefits from Washington and other international partners.

According to the source, Pakistan has approached US Treasury Secretary Scott Bessent for a Bilateral Exchange Stabilisation Support Facility between the two governments, with a maturity period of up to five years.

Facility Aimed at Supporting Reserves, Rupee

If approved, the facility would help Pakistan

increase its reserves, reduce pressure on the Pakistani rupee and lower its dependence on multilateral financial support, even as the country continues implementing fiscal and monetary reforms under its International Monetary Fund programme.

Pakistan remains under a $7 billion IMF programme that has required tax increases, spending controls and other reforms that have carried political costs.

Exchange stabilisation facilities are rare US Treasury-backed mechanisms that can provide dollars, swaps or guarantees to support foreign currency reserves and help stabilise currencies. They differ from standing dollar swap arrangements maintained by the US Federal Reserve with some major central banks.

Pakistan previously avoided a potential default in 2023 after securing a $3 billion IMF standby arrangement and later obtained a $7 billion Extended Fund Facility, along with a separate $1.3 billion loan aimed at improving resilience against climate change and natural disasters.

However, the country’s reserves continue to rely heavily on official financing, rollovers and deposits from countries including China and Saudi Arabia.

Seeking Stronger Economic Ties

The request for US support comes as Pakistan looks to deepen economic ties with Washington. A currency support facility would serve as both a financial cushion and a political signal, potentially easing pressure on reserves and reducing reliance on IMF disbursements and emergency assistance.

Pakistan’s economic reforms have helped stabilise the economy but have also involved higher taxes, spending restraint and limited room for development and welfare spending.

The country has also sought wider economic cooperation with the Trump administration, including areas such as cryptocurrency, real estate and mining.

Pakistan has signed a stablecoin agreement for cross-border payments with an affiliate of World Liberty Financial, pursued plans linked to the redevelopment of the Roosevelt Hotel in New York, and sought US investment in mining projects, including Reko Diq, where the US Export-Import Bank has announced $1.2 billion in financing.

(With inputs from Reuters)