Pakistan has submitted a request to the US Treasury Department for a $10 billion facility to strengthen its foreign exchange reserves, according to Finance Minister Muhammad Aurangzeb. As reported by Business Recorder, Aurangzeb confirmed that negotiations are ongoing with the US Treasury, though no agreement has been finalised. The proposed facility is designed as an Exchange Stabilisation Support Facility rather than a conventional loan, focusing on signalling currency and foreign exchange stability to international markets. According to Aurangzeb's comments to Business Recorder, this initiative is not about securing a credit line or loan, but rather sending a positive signal about Pakistan's currency and foreign exchange stability that allows the country to access international markets. "This is not about a credit line or a loan or whatever. This is a signal about our currency stability, a signal about our foreign exchange stability, and that in turn also allows us that we can go to the market," the finance minister explained while talking to the media on Wednesday.
The facility request represents Pakistan's strategic shift away from traditional financing arrangements toward market-based financing with longer repayment timelines. According to Aurangzeb's comments to Business Recorder, Pakistan's complete effort is now directed toward reducing dependence on short-term bilateral rollovers and emergency financial support from friendly nations. The country is currently implementing a $7 billion IMF programme agreed in 2024, while working to strengthen its credit standing and restore regular access to global capital markets. As reported by Business Recorder, Pakistan has been facing pressure on its external payments for several years and came close to default in 2023 before avoiding it with timely support from the IMF and bilateral partners. "Some will succeed, while with others there might be issues," Aurangzeb said, adding that the government was nevertheless clear about its objective of reducing reliance on short-term bilateral rollover arrangements and moving towards longer-term market financing.
Pakistan is actively engaging with international credit rating agencies to improve its sovereign rating, which has remained unchanged since 2003-04. As reported by Business Recorder, Finance Minister Aurangzeb stated that the government wants to move toward a B+ rating, which could enable easier access to international markets at potentially lower borrowing costs. A stronger rating would also allow Pakistan to raise debt with longer maturities, ranging from five to seven years and potentially extending to 10 years. The minister emphasized that Pakistan remains grateful to its bilateral partners for support over the past decade, particularly during the last three years, but its financing strategy is now being recalibrated. "If we move towards that side, we will have opportunities on the market side to extend maturities to five, seven or 10 years, so that you won't have to ask this question as often," Aurangzeb explained, noting that such access would create greater flexibility for managing external financing requirements.
The government expects to receive feedback from either Exim Bank or the US Treasury by the end of September, according to Aurangzeb's statements to Business Recorder. Pakistan's financial vulnerability has been a longstanding concern, with the country repeatedly turning to the IMF and friendly nations to bridge external financing gaps and avoid default risks. The proposed facility comes as part of broader efforts to reduce reliance on repeated emergency financial support from bilateral partners, with Aurangzeb noting that some financing arrangements may succeed while others might face issues. The minister emphasized the government's clear objective of reducing reliance on such arrangements while maintaining gratitude for past support.
Pakistan has already started laying the groundwork for a return to international debt markets and has appointed three arrangers for the process. According to Aurangzeb, the country's recent issuance of various debt instruments, including a Eurobond, Islamic Sukuk and a dollar-settled rupee-linked bond, serves as evidence of efforts to rebuild investor confidence and regain access to international markets. "Our entire effort is to go into the market with five-, seven- or 10-year tenors and get credit," Aurangzeb said, highlighting the country's commitment to moving away from short-term financing arrangements toward longer-term market access. The Exchange Stabilisation Support Facility, if approved by the US, would bolster Pakistan's reserves, ease pressure on the rupee and reduce its reliance on multilateral financing, providing a crucial signal to international markets about the country's financial stability.
